Meibomian glands secrete lipid-rich meibum, which prevents tear evaporation. Aging-related Meibomian gland shrinkage may result in part from stem cell exhaustion and is associated with evaporative dry eye disease, a common condition lacking effective treatment. The identities and niche of Meibomian gland stem cells and the signals controlling their activity are poorly defined. Using snRNA-seq, in vivo lineage tracing, ex vivo live imaging, and genetic studies in mice, we identify markers for stem cell populations that maintain distinct regions of the gland and uncover Hedgehog (Hh) signaling as a key regulator of stem cell proliferation. Consistent with this, we show that human Meibomian gland carcinoma exhibits increased Hh signaling. Aged glands display decreased Hh and EGF signaling, deficient innervation, and loss of collagen I in niche fibroblasts, indicating that alterations in both glandular epithelial cells and their surrounding microenvironment contribute to age-related degeneration. These findings suggest new approaches to treat aging-associated Meibomian gland loss.