You can set the Hadoop home directory by sending a -Dhadoop.home.dir to the VM. To send this parameters to all your application that you execute inside eclipse, you can set them in Window->Preferences->Java->Installed JREs-> (select your JRE installation) -> Edit.. -> (set the value in the "Default VM arguments:" textbox). You can replace $HADOOP_HOME with the path to your Hadoop installation.