Eduardo is imaginary friends. Although he seems scary on the outside, he's actually very timid and a huge coward on the inside. He is afraid of most things, but never shies away when a child, or any of his friends, is endangered. He speaks broken English riddled with Spanish with a Spanish accent, as his creator was Hispanic, later revealed to have been a girl who grew up to become a police officer in "Good Wilt Hunting."
In The Future, Fuse's henchmen have destroyed Foster's, leaving Eduardo homeless and the only Imaginary Friend (except perhaps Coco -- this is still unclear) who has survived to this point. During the mission to gain the Nano, he's within Fusion 's Lair and needs the player's help to reach Samurai Jack, whom he greatly respects, before taking on his own Fusion. His Nano is the last one that can be made in The Future before the player can head to the Past. When the player is heading to the Past in the time machine, Eduardo is there saying goodbye to him before he leaves with the Nano creation blueprints.
In the Past, Eduardo is at Foster's Home and is still giving out missions and helping to guard the house from Fusions. Strangely, during a mission for Bubbles in the Past, his Fusion was eventually discovered to be the one helping the player and Bubbles by finding the orange chalk used to write the note that the player retrieves after the Fusion is defeated in his lair, probably due to Imagination Energy having some strange effect on the Fusions of the Foster's characters.
This is later proven after the player deals with Fusion Coco. Eduardo is also on Mt. Neverest when the hero graduates.