Faces are important for non-verbal communication in daily life, and eye gaze direction provides important information for adult–infant interaction. Four-month-old infants and adults better recognize faces when accompanied with direct gaze, suggesting a special status of ‘eye contact’. Whether mutual gaze plays a role in face recognition from birth, or whether it requires expertise, is investigated in this paper. We conducted a between subjects design, for a total of four experiments, two involving habituation (1a, 1b) and two involving preference tests (2a, 2b), to investigate newborns' ability to recognize faces when gaze direction is manipulated. We predicted that a face accompanied with direct gaze would be better recognized by newborns. In contrast, we expected no evidence of identity recognition when newborns were familiarized with a face with averted gaze. According with our expectations, newborns were able to recognize a face identity when previously familiarized with direct gaze, but not with averted gaze. However, this effect was face identity-specific. Overall, our results suggest that direct gaze can modulate face processing and affects preferences and face identity learning in newborns. Copyright © 2010 John Wiley & Sons, Ltd.