Systems and methods associated with a fluid-activated shaft seal are provided. The systems, which feature multiple components, include a support component defining an exterior surface, a carrier component including an interior surface to slideably engage the exterior surface of the support component, and a seal disposed relative to the carrier component. The seal includes a lip portion and a fluid-responsive gel material that expands when exposed to a fluid to urge the lip portion towards or into contact with a shaft. The gel material contracts in the absence of the fluid to form or increase the size of a gap between the shaft and the lip portion. Methods of assembling and installing such a system are also described.