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                                                              EXHIBIT 10.26
                                       
                             EMPLOYMENT AGREEMENT
                                       
                                       
     THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 26th
day of November, 1997, by and between Michael Barry, a resident of Oregon
("Employee") and ENGINEERING ANIMATION, INC., a Delaware corporation with its
principal offices in Ames, Iowa ("EAI" or "Company").

                                   RECITALS

     A.   EAI is in the business of producing 3D visualization software
products, interactive and custom 3D software products, and conducting various
other activities associated therewith (the "Business").

     B.   EAI desires to employ Employee and Employee desires to be employed by
EAI on the terms and conditions set forth herein.

                                   AGREEMENT

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1.   EMPLOYMENT TERMS.  Subject to the terms and conditions set forth herein,
EAI will employ Employee for a term commencing as of October 30, 1997 (the
"Effective Date") and ending on the second anniversary of the Effective Date,
or such earlier date as may occur pursuant to the terms of this Agreement (the
"Employment Term").  This Agreement may be extended by mutual agreement of the
parties.

2.   EMPLOYMENT DUTIES.  During the term of this Agreement, Employee will serve
EAI as Vice President and Co-General Manager, Software Division.  Employee's
initial duties shall include shared management responsibilities, including
profit and loss responsibilities, for the Software Division shared with other
Co-General Managers in the Office of General Manager, Software.  Employee shall
perform such other duties as assigned from time to time by the Chief Executive
Officer of EAI, subject to the terms of this Agreement.  Employee will, during
the term of this Agreement, serve the Company faithfully, diligently and
competently and will perform assigned duties on a full-time basis to the best
of Employee's ability.

3.   COMPENSATION.  During the term of employment, EAI will pay to Employee 
for services rendered by Employee under this Agreement, the following:

                                      
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      (a) From the Effective Date of this Agreement through the second 
          anniversary of the Effective Date, a salary at a rate of $160,008 
          per annum ($13,334.00 per month) payable in arrears monthly, in 
          accordance with the EAI's ordinary payroll practices; and

      (b) During the last quarter of each fiscal year Employee will participate
          in the planning process which results in the establishment of goals
          and budgets for the following fiscal year.  After the end of each
          fiscal year of the Company, beginning fiscal 1998, during the
          Employment Term, Employee shall be eligible for an annual performance
          bonus, the nature and amount of which shall be determined by and in
          the discretion of the Company after reviewing Employee's performance
          and the Company's results of operations during and for such fiscal
          year and such other considerations deemed appropriate by the Company.
          Notwithstanding anything else in this Agreement, the declaration and
          payment and the amount of any performance bonus to Employee shall be
          in the discretion of the Company and Employee shall have no absolute
          right to a performance bonus in any year.

Payments made pursuant to this section while Employee is employed by shall be
treated as wages for withholding and employment tax purposes.


4.   INSURANCE.  During the Employment Term, the Company shall provide to the
Employee a term life insurance policy in the face amount of $200,000 with the
beneficiary to be named by the Employee.  In addition, the Company shall be
entitled to obtain as the beneficiary "key man" or other similar life insurance
on Employee in an amount that the Company shall in its discretion deem
appropriate.

5.   SEVERANCE PROVISIONS.  In the event that Employee is terminated for
any reason whatsoever (including death, permanent disability and Change of
Control as defined in the EAI Employee Stock Option Plan), except for cause as
defined in paragraph 11, during the term of this Agreement, then Employee shall
receive severance payments equal to the monthly salary payments and a
continuation of benefits to the end of the Employment Term; in addition
thereto, if Employee is terminated for any reason whatsoever, except for cause
as defined in paragraph 11, during the second year of the Employment Term,
Employee shall receive such severance payments so that Employee shall receive
severance payments for a total of twelve (12) months from termination, in an
aggregate amount equal to Employee's annual salary and bonus in the year prior
to termination.


6.   BENEFITS.

     (a)  Employee shall be entitled during the Employment Term to participate
          in such employee benefit plans and programs, including, without
          limitation, profit 


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          sharing, cafeteria, health and life insurance plans, as are 
          maintained from time to time for employees of EAI to the extent 
          that his position, tenure, compensation, age, health and other 
          qualifications make him eligible to participate.  The Company does 
          not promise the adoption or continuance of any particular plan or 
          program during the employment term and employee's (and his 
          dependents') participation in any such plan or program shall be 
          subject to the provisions, rules, regulations and laws applicable 
          from time to time thereto.
     
     (b)  During the Employment Term, Employee shall be entitled to paid time
          off in accordance with the policies of the Company which provide for
          fifteen (15) days paid time off during the first year of employment,
          eighteen (18) days during the second year of employment, and twenty-
          one (21) days during the third year of employment.  In addition,
          Employee shall be entitled to paid time off on such holidays as are
          observed by the Company from time to time.  Accrued, unused vacation
          may be carried over from one year to the next in accordance with
          Company policies.

     c.   Employment shall be permitted, upon the Effective Date to 
          participate in the EAI 401(k) savings plan which permits employee 
          contributions of up to eighteen percent (18%) of total annual 
          compensation and provides that EAI will match one-half of 
          Employee's contribution up to a total match amount of two percent 
          (2%) of Employee's total compensation.  EAI's contribution to the 
          Plan vests according to the terms of the Plan.

7.   REIMBURSEMENT OF EXPENSES.  To the extent consistent with the general
expense reimbursement policies maintained by EAI from time to time, Employee
shall be entitled to reimbursement for ordinary, necessary and reasonable out-
of-pocket trade or business expenses which Employee incurs in connection with
performing his duties under this Agreement, including reasonable travel and
meal expenses.  The reimbursement of all such expenses shall be made upon
presentation of evidence reasonably satisfactory to EAI of the amounts and
nature of such expenses and shall be subject to the prior approval of EAI.

     8.   KEY EMPLOYEE NON-COMPETITION AGREEMENT.  Employee agrees to be bound
by the terms of the Key Employee Non-competition Agreement which is attached
hereto as Exhibit A.

     9.   EMPLOYEE PROPRIETARY INFORMATION AGREEMENT.  Employee recognizes that
as a result of employment by EAI, he will come into possession of confidential
information and as a condition of employment, agrees to execute and abide by
the terms of the Employee Proprietary Information Agreement attached hereto as
Exhibit B.

                                      
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     10.  STOCK OWNERSHIP.  Within sixty (60) days of the commencement of this
Agreement, Employee will become a shareholder of EAI by purchasing or
continuing to hold at least _________ shares.  Such ownership of EAI shares
shall continue through the term of this Agreement.

     11.  TERMINATION.  This Agreement may be terminated for cause which shall
be defined as (i) any action by Employee involving willful gross misconduct
having a material adverse effect on the Company; (ii) Employee being convicted
of a felony under the laws of state of the United States or any state or under
the laws of any other country or political subdivision thereof.


12.  MISCELLANEOUS.

     
     a.   All notices hereunder shall be in writing and shall be deemed given
          when delivered in person or when sent by email or telecopier followed
          by hard copy; or following three (3) business days after being
          deposited in the United States mail, postage prepaid, registered or
          certified mail, or two (2) days after delivery to a nationally
          recognized express courier, expenses prepaid, addressed as follows:
     
               If to Employee: Addressed to the last address on the payroll
                          records of EAI.
               
               If to EAI: Engineering Animation, Inc.
                          2321 North Loop Drive
                          Ames, IA  50010
                          Attention:  Jamie A. Wade, General Counsel
     
     
     b.   This Agreement shall be binding upon and inure to the benefit of the
          parties hereto and their respective heirs, successors and permitted
          assigns
     
     
     c.   This Agreement contains all of the agreements between the parties
          with respect to the subject matter hereof and this Agreement
          supersedes all other agreements, oral or written, between the parties
          hereto with respect to the subject matter hereof.
     
     
     d.   No change or modification of this Agreement shall be valid unless the
          same shall be in writing and signed by the parties hereto.  No waiver
          of any provisions of this Agreement shall be valid unless in writing
          and signed by the waiving party.
     
     
     e.   If any provisions of this Agreement (or portions thereof) shall, for
          any reason, be deemed invalid or unenforceable by any court of
          competent jurisdiction, such provisions (or portions thereof) shall
          be ineffective only to the extent of such 

                                      
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          invalidity or unenforceability, and the remaining provisions of 
          this Agreement (or portions thereof) shall nevertheless be valid, 
          enforceable and of full force and effect.  EAI's rights under this 
          Agreement shall not be exclusive and shall be in addition to all 
          other rights and remedies available at law or in equity.
     
     
     f.   This Agreement may be executed in multiple counterparts, each of
          which shall be deemed to be an original and all of which, when taken
          together, shall constitute a single instrument.
     
     
     g.   This Agreement shall be governed and controlled as to validity,
          enforcement, interpretation, construction, effect and in all other
          respects by the laws of the State of Iowa applicable to contracts
          made in Iowa (other than any conflict of laws rule which might result
          in the application of the laws of any other jurisdiction).  Employee
          hereby expressly submits and consents in advance to the personal
          jurisdiction of the federal and state courts of the State of Iowa for
          all purposes in connection with any action or proceeding arising out
          of or relating to this Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.

ENGINEERING ANIMATION, INC.                     MICHAEL BARRY, EMPLOYEE


By:   /S/ MATTHEW RIZAI                         /S/ MICHAEL BARRY
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