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At Campfire’09 google launches Java support for App engine. (Source: Techcrunch)

With App Engine, you can build web applications using standard Java technologies and run them on Google’s scalable infrastructure. The Java environment provides a Java 6 JVM, a Java Servlets interface, and support for standard interfaces to the App Engine scalable datastore and services, such as JDO, JPA, JavaMail, and JCache. Standards support makes developing your application easy and familiar, and also makes porting your application to and from your own servlet environment straightforward.

The Google Plugin for Eclipse adds new project wizards and debug configurations to your Eclipse IDE for App Engine projects. App Engine for Java makes it especially easy to develop and deploy world-class web applications using Google Web Toolkit (GWT). The Eclipse plugin comes bundled with the App Engine and GWT SDKs.

Checkout developers guide here.

You can download SDK from here.

Things worth considering before you start a java based project :

• A blog or wiki or google docs (a few opensource options available are : twiki, plog, wordpress etc), where your team can write about the project and updates
• A code repository: SVN or CVS, though I would prefer SVN over CVS. A SmartSVN client is useful.
• FishEye – a source code repository insight. 30 day free trial is avaibale, but you will have to buy a license after that.
• To manage a project’s build, would prefer Maven over Ant.
• Continuum - Continuous integration server for building Java based projects.
• Task management – Scrumworks or basecamp.
• Bugzillla - Tracking bugs

Will add more here, if I find any other good alternatives.