Although both mucin1 (MUC1) and transient receptor potential cation channel subfamily V member 1 (TRPV1) have been reported to be associated with dry eye (DE) disease, whether they interact and their regulatory roles in diabetic DE disease are unknown. Diabetic DE model mice were generated by streptozotocin induction and assessed by corneal fluorescein staining, tear ferning (TF) tests, phenol red thread tests, hematoxylin and eosin staining of corneal sections and periodic acid Schiff staining of conjunctival sections. Cell proliferation was measured by CCK8 assay. Western blotting was performed to measure protein expression. Primary mouse corneal epithelial cells (MCECs) were cultured after enzymatic digestion. Immunofluorescence staining of MCECs and frozen corneal sections was conducted to assess protein expression and colocalization. Coimmunoprecipitation was performed to detect protein‑protein interactions. It was found that, compared with control mice, diabetic DE mice exhibited increased corneal epithelial defects, reduced tear production, poorer TF pattern grades and impaired corneal and conjunctival tissues. In vivo and in vitro experiments showed that hyperglycemia impaired cell proliferation, accompanied by decreased levels of the MUC1 extracellular domain (MUC1‑ND) and TRPV1. Additionally, it was found that capsazepine (a TRPV1 antagonist) inhibited the proliferation of MCECs. Notably, MUC1‑ND was shown to interact with the TRPV1 protein in the control group but not in the diabetic DE group. It was also found that the AKT signaling pathway was attenuated in the diabetic DE mice and downstream of TRPV1. MUC1‑ND interacted with TRPV1, partly activating the AKT signaling pathway to promote MCEC proliferation. The present study found that the interaction of MUC1‑ND with TRPV1 promotes MCEC proliferation by partly activating the AKT signaling pathway, providing new insight into the pathogenesis of corneal epithelial dysfunction in diabetic DE disease.