Simply Stated:

Red eye occurs when light from an on-camera flash reflects off the back of the eye, giving someone a demonic look. Red eye is such a common problem in color images that Photoshop Elements includes an easy-to-use tool devoted to fixing the problem. Here are the steps:

Select the Red Eye Brush tool from the toolbar.
Choose a brush from the pop-up palette on the options bar. I use a Soft Round 65 pixel brush, but the brush you choose will depend on the specifics of your particular image.
Click Default Colors on the options bar and specify black as the replacement color.
Select First Click from the Sampling pop-up menu and specify a Tolerance of 30 percent.
Click on the red area of the eye to specify the color for removal.
Drag over the eye until the red is replaced with black. If the replacement black is too light, use the Burn tool to darken the pupil.

If a person's face is pink, sometimes the Red Eye Brush doesn't work as well. To reduce this problem, use the Lasso tool to select the red-eye area and then apply the Red Eye Brush tool.

Detailed Method 1

Photoshop Elements includes a special red-eye brush tool, but you may find it doesn't always give the best results. This is a very easy method that works in nearly all situations.

Here's How:

1. Open the photo.
2. Go to View > New View to open a duplicate window.
3. Zoom in on one window so you can see the eyes and arrange the Windows you can see both the zoomed in view and the actual size view.
4. If the layers palette is not visible, display it by going to Window > Show Layers.
5. Click the "create a new layer" button at the bottom of the layers palette.
6. At the top of the layers palette, use the blending mode menu to change this new layer's blending mode to Color.
7. Click the foreground color swatch in the tool box and select the replacement eye color.
8. Select the paintbrush tool.
9. In the options bar, choose a soft-edged brush, slightly smaller than the red eye area. Click on opacity and set it low, to about 30%.
10. Gradually paint over the red area in the eyes, being careful not to paint over the white of the eyes or the skin around the eyes. Zoom in closer if you need more control.

Tips:

1. Because we use a low opacity brush, you will probably need to build up the color in several passes. Every time you release and press the mouse button, you will build up more color.
2. If you overdo it, you can use the opacity slider on the layer palette to reduce the color.
3. If you accidentally paint outside of the iris area, it's easy to clean up because you're on a separate layer. Just use the eraser tool to remove any stray color, or trash the layer and try again.
4. When you're happy with the results you can merge the layer down or flatten the image from the Layer menu.