The discovery of direct downstream targets of transcription factors (TFs) is necessary for understanding the genetic mechanisms underlying complex, highly regulated processes such as development. In this report, we have used a combinatorial strategy to conduct a genome-wide search for novel direct targets of Eyeless (Ey), a key transcription factor controlling early eye development in Drosophila. To overcome the lack of high-quality consensus binding site sequences, phylogenetic shadowing of known Ey binding sites in sine oculis (so) was used to construct a position weight matrix (PWM) of the Ey protein. This PWM was then used for in silico prediction of potential binding sites in the Drosophila melanogaster genome. To reduce the false positive rate, conservation of these potential binding sites was assessed by comparing the genomic sequences from seven Drosophila species. In parallel, microarray analysis of wild-type versus ectopic ey-expressing tissue, followed by microarray-based epistasis experiments in an atonal (ato) mutant background, identified 188 genes induced by ey. Intersection of in silico predicted conserved Ey binding sites with the candidate gene list produced through expression profiling yields a list of 20 putative ey-induced, eye-enriched, ato-independent, direct targets of Ey. The accuracy of this list of genes was confirmed using both in vitro and in vivo methods. Initial analysis reveals three genes, eyes absent, shifted, and Optix, as novel direct targets of Ey. These results suggest that the integrated strategy of computational biology, genomics, and genetics is a powerful approach to identify direct downstream targets for any transcription factor genome-wide.