Systems and methods associated with a fluid-activated shaft seal are provided. The system (100) includes a housing (104) and a seal disposed relative to the housing. The method reduces flow of a fluid between the shaft (102) and the housing. The method involves installing the housing in an opening relative to the shaft and locating the seal relative to the housing. The seal includes a gel material that expands when exposed to a fluid. The seal (102a, 102b) reduces flow of the fluid through a gap between the housing and the shaft. Advantages of the system and method include reduced wear to theseal due to friction because the seal does not engage the shaft in the absence of a fluid. The seal engages the shaft in the presence of a fluid. Sealing quality is improved by increasing the pressure differential acting on the gel material. In some embodiment, the seal includes a lip portion (126a, 126b).