Before the age of 3, most toddlers don’t yet grasp the importance of looking people in the eye when speaking to them. In fact, looking down or away is how they attempt to take control of a situation. When you’re explaining to your child that he shouldn’t jump on the bed, for example, he may look at a wall to avoid becoming overwhelmed with feelings of guilt. Or if it’s his birthday and he’s receiving presents, your child may not be able to look at Grandpa because he’s too excited. One way to draw your child out is to use a puppet to talk to him. Get his attention by placing the puppet within his line of vision. Use it to help him focus on you, then drop the puppet and catch his gaze.

When your toddler seems receptive to learning new social skills — usually sometime after his third birthday — you’ll be able to explain to him why he should look a person in the eye during conversations. Tell him, “It’s the polite thing to do. It lets the other person know that you’re listening. See how I look at you when you’re telling me something?” Remind him from time to time and reward him with praise when he remembers. Gradually he’ll learn that when he treats other people respectfully, he’s treated with respect himself.

Reference: http://www.babycenter.com/