The term "eye in the sky" is a reference to surveillance cameras which can see everything we do. More specifically, security cameras in casinos, since there they call them "the eye in the sky". Associations with George Orwell's novel "Big Brother" are unproved (the group never mentioned that) and connections with Sauron's eye in "The Lord of the Rings" seem too carried away. Also, proposed connections with the Christian God (who sees everything and knows everything) don't make sense either, since God always forgives when there is a true repentance, but in this song the person who is the Eye in the Sky seems quite determined not to forgive ever again.

But the song does not talk about security cameras. That's just a metaphor for what the song is really talking about. A man dumping his lover (breaking up with her), telling her that he knows her too well now and he knows exactly what she thinks, what she feels and what her reactions will be.

She did something very wrong and now it's too late to apologize. He's had enough of it. She could fool him in the past, but now he has outsmarted her (he is more clever than her) and he can clearly see how she used to manipulate him and control him. Now "the tables have turned" (the situation has reversed) and he is the one controlling the situation and saying goodbye.

The cover of the single and the album shows a golden Egyptian hieroglyphic on a light blue-green background. The hieroglyphic represents Horus' eye. He is the falcon god, one of the three most important gods in Egypt (Horus and his parents: Isis and Osiris). Contrary to the meaning of the "Eye" in the song, Horus' eye was a sign of protection and health.

Since Alan Parsons composed this song in a time when he was fascinated by gambling and casinos (or so they say), and since the expression "eye in the sky" is a casino slang term for security cameras, many people think that this song is not talking about lovers at all, but simply about what it literary says: security cameras in casinos, watching everything you do, and maybe even controlling the results of the gambling through cheating. But if the song is talking about casino frauds, most of the song doesn't make much sense, since most of it is talking about heartbreak.

Here is a more in-depth explanation of the lines in the song:

In the past, Alan Parsons fell in love with a girl. She hurt him, manipulated him and deceived him, but he was a fool and believed in all her lies. But now he knows her much better, so much better that he knows when she is lying and when she is deceiving him. So he decides to break up with her, to leave her, and that is what he is telling her in this song, that he is going to leave her.

She did something wrong, probably cheated on him (had an affair with another man), and that is when he decides to leave her forever.

Don't think sorry's easily said
Don't try turning tables instead
You've taken lots of chances before
But I ain't gonna give any more

She may think that saying sorry will fix everything, but sorry is a difficult word to say (at least if you want it to sound sincere). She shouldn't try to change the perception of the situation (turn tables) and pretend she was just a poor victim. In the past, he has forgiven her many times (you've taken lots of chances), but she missed all those opportunities and now he won't give her any more opportunities, this is the end.

Don't say words you're gonna regret
Don't let the fire rush to your head
I've heard the accusation before
And I ain't gonna take any more

After I told you all that, you are probably getting very angry at me, but don't say things that you will regret later, don't get overexcited and lose control. You have accused me of the same things other times in the past, but that's it, I will not let you accuse me again.

Believe me
The sun in your eyes
Made some of the lies worth believing

You are so beautiful that it really was very easy to believe in your lies, to think you were a good person.

I am the eye in the sky, looking at you
I can read your mind
I am the maker of rules, dealing with fools
I can cheat you blind
And I don't need to see any more
To know that
I can read your mind
(Looking at you)

Now I am wiser and know you better and the situation has totally changed. I know how you think and I am in control now.

Don't leave false illusion behind
Don't cry, I ain't changing my mind

I am leaving you, I want to stop this relationship and my decision is final, I will never ever come back to you, so don't hope for that, and don't cry, because nothing you can do will make me change my decision.

So find another fool like before
'Cause I ain't gonna live anymore
Believing
Some of the lies
While all of the signs are deceiving

I used to be a fool and believe all your lies and let you manipulate and deceive me, but I am not a fool now, so if you want to be with a foolish man, find another fool. I believed your lies in the past but I will never believe your lies again. I was a fool because everything was showing that you were lying, and still, I believed you. That won't happen again.