The study explored on the development needs of engineering students on employability skills and its relationship with their internship performance evaluation from the head of the company or department. The study utilized a quantitative descriptive type of research with 125 total engineering graduates from an academic institution in the Philippines. Results of the study showed that engineering students have excellent internship performance evaluation rating with regard to attitude, personality, knowledge and skills. They have identified the System Thinking Skill with very high development need, assessment on employability skills along with critical thinking and interpersonal skill. Meanwhile, they considered literacy and numeracy as well as work ethics and management skills as they have already developed. Test of relationship showed that skill development needs in terms of literacy and numeracy, management skill and work ethics have significant negative correlation to the four aspects of internship performance evaluation while positive relationship exists between skill development needs in terms of critical thinking and system thinking skills and the internship performance.