Eyes absent (Eya) is an evolutionarily conserved transcriptional coactivator and protein phosphatase that regulates multiple developmental processes throughout the metazoans. Drosophila eya is necessary for survival as well as for the formation of the adult eye. Eya contains a tyrosine phosphatase domain, and mutations altering presumptive active-site residues lead to strongly reduced activities in ectopic eye induction, in vivo genetic rescue using the Gal4-UAS system, and in vitro phosphatase assays. However, these mutations have not been analyzed during normal development with the correct levels, timing, and patterns of endogenous eya expression. To investigate whether the tyrosine phosphatase activity of Eya plays a role in Drosophila survival or normal eye formation, we generated three eya genomic rescue (eyaGR) constructs that alter key active-site residues and tested them in vivo. In striking contrast to previous studies, all eyaGR constructs fully restore eye formation as well as viability in an eya null mutant background. We conclude that the tyrosine phosphatase activity of Eya is not required for normal eye development or survival in Drosophila. Our study suggests the need for a re-evaluation of the mechanism of Eya action and underscores the importance of studying genes in their native context.