Prophet Isa (Peace be upon him), is still alive--in the (second) sky.. He will descend to earth before the Day of Judgment and his descent will be one of the great signs of the nearing of that Day. Prophet Muhammad(peace be upon him) informed us Isa (Peace be upon him) will descend to earth at a place on the eastern side of Damascus, with his hands on the wings of two angels. He will meet a group of Muslims getting ready to perform the Prayer, with the Mahdi as their Imam. The Mahdi will ask Prophet Isa (Peace be upon him) to lead them in that prayer, however, Isa (Peace be upon him) will ask the Mahdi to stand imam for them--as a sign that Prophet Isa (Peace be upon him))will rule with the rules revealed to Prophet Muhammad. After this one time, Isa (Peace be upon him) will lead the people in prayers because he has a higher status than the Mahdi
After he descends, Prophet Isa (Peace be upon him) will rule the earth with the Shariah of Prophet Muhammad(peace be upon him), the Shariah Muslims are ordered to follow until the Judgment Day. He will break the cross, kill the swine, and abolish the jizyah (compulsory payment by the People of the Book to the Muslim state), because in the rules of Prophet Muhammad(peace be upon him) the jizyah is only applicable until the descent of Isa (Peace be upon him). He will kill the Dajjal, an ugly, evil blasphemer who claims himself as God, and who misleads many people to blaspheme. Prophet Isa (Peace be upon him) will perform Hajj and travel to visit the grave of the Prophet to salute him, and to greet him by saying, "As-salamu alaykum ya rasulAllah", as narrated by Abu Dawud at-Tayalisiyy and others.
During his time, the people of Ya'juj and Ma'juj will appear and cause great destruction to the earth and devastation to the Muslims. Prophet Isa (Peace be upon him) will take the believers to Mount at-Tur to supplicate Allah there to relieve them from these people. Allah will answer their dua' and destroy all the people of Ya'juj and Ma'juj. After that, Prophet Isa (Peace be upon him) will rule the Muslims and there will be a time when peace, comfort, and safety will prevail. Prophet Isa (Peace be upon him) will live for forty (40) years on earth after he descends. He will marry and have children. Then, he will die and be buried. Abdullah Ibn Salam said, "It is written in the original Torah that Prophet Isa (Peace be upon him) will be buried next to Prophet Muhammad(Peace be upon him)" (in the chamber of Bibi Aishah.)