Previous studies on ablation of several key genes of meibogenesis related to fatty acid elongation, omega oxidation, and esterification into wax esters have demonstrated that inactivation of any of them led to predicted changes in the meibum lipid profiles and caused severe abnormalities in the ocular surface and Meibomian gland (MG) physiology and morphology. In this study, we evaluated the effects of Soat1 ablation that were expected to cause depletion of the second largest class of Meibomian lipids (ML)—cholesteryl esters (CE)—in a mouse model. ML of the Soat1-null mice were examined using liquid chromatography high-resolution mass spectrometry and compared with those of Soat1+/− and wild-type mice. Complete suppression of CE biosynthesis and simultaneous accumulation of free cholesterol (Chl) were observed in Soat1-null mice, while Soat1+/− mutants had normal Chl and CE profiles. The total arrest of the CE biosynthesis in response to Soat1 ablation transformed Chl into the dominant lipid in meibum accounting for at least 30% of all ML. The Soat1-null mice had clear manifestations of dry eye and MG dysfunction. Enrichment of meibum with Chl and depletion of CE caused plugging of MG orifices, increased meibum rigidity and melting temperature, and led to a massive accumulation of lipid deposits around the eyes of Soat1-null mice. These findings illustrate the role of Soat1/SOAT1 in the lipid homeostasis and pathophysiology of MG.