Vertebrate limb tendons are derived from connective cells of the lateral plate mesoderm. Some of the developmental steps leading to the formation of vertebrate limb tendons have been previously identified; however, the molecular mechanisms responsible for tendinous patterning and maintenance during embryogenesis are largely unknown. The eyes absent (eya) gene of Drosophila encodes a novel nuclear protein of unknown molecular function. Here we show that Eya1 and Eya2, two mouse homologues of Drosophila eya, are expressed initially during limb development in connective tissue precursor cells. Later in limb development, Eya1 and Eya2 expression is associated with cell condensations that form different sets of limb tendons. Eya1 expression is largely restricted to flexor tendons, while Eya2 is expressed in the extensor tendons and ligaments of the phalangeal elements of the limb. These data suggest that Eya genes participate in the patterning of the distal tendons of the limb. To investigate the molecular functions of the Eya gene products, we have analyzed whether the highly divergent PST (proline-serine-threonine)-rich N-terminal regions of Eya1–3 function as transactivation domains. Our results demonstrate that Eya gene products can act as transcriptional activators, and they support a role for this molecular function in connective tissue patterning.