Institutional agricultural credit plays an important role in enhancing agricultural productivity and improving farmers’ income. The present study examined the impact of institutional agricultural credit on farmers’ income across districts of Andhra Pradesh using district-level panel data for the period 2010–2024. A balanced panel dataset comprising thirteen districts was constructed using secondary data collected from the Reserve Bank of India, National Bank for Agriculture and Rural Development, and Directorate of Economics and Statistics. Descriptive statistics, correlation analysis, panel unit root tests, and panel regression techniques were employed for analysis. The Hausman specification test confirmed the suitability of the Fixed Effects Model. The results revealed that institutional agricultural credit had a positive and statistically significant impact on farmers’ income. The coefficient of agricultural credit was positive and significant at p < 0.01, indicating that increased access to institutional agricultural credit contributes significantly to higher farmers’ income. Irrigation coverage, cropping intensity, and fertilizer consumption also positively influenced farmers’ income. The regression model explained 71 percent of the variation in farmers’ income across districts. The study concludes that strengthening institutional agricultural credit systems is essential for improving agricultural productivity and enhancing rural livelihoods. Policy measures aimed at ensuring timely and adequate institutional credit along with investments in irrigation infrastructure and efficient input utilization can significantly contribute to sustainable agricultural development in Andhra Pradesh.