Climate change presents significant challenges for smallholder arable crop farmers whose major livelihood revolves around agriculture. This is further worsened by farmers’ poor awareness and limited knowledge of mitigating the associated risks with debilitating consequences on Farm Income. Therefore, this study investigated the perceived effects of climate change on farm income in South-west Nigeria, using cross-sectional data elicited from randomly selected 389 arable crop farmers. The data were analyzed using descriptive statistics, principal component analysis (PCA), and ordinary least square regression (OLS) technique. The results indicated that the farming population skewed towards older individuals, with an average age of approximately 55 years. Farmers were predominantly male, comprising 78.1% of the sample, who primarily derived their livelihood from agriculture, with 77.4% engaging in farming as their main occupation. Additionally, a significant portion of the farmers, accounting for 67.6%, possess secondary or higher education qualifications. Widely adopted coping practices include varying planting dates, multiple cropping, zero bush burning, crop rotation, irrigation, manure mulching, and cultivating drought/flood-tolerant varieties. Also, the estimates from the fitted OLS regression model revealed that farmers’ knowledge and perception of climate change had significant relationships with farm income. Factors such as education, years of farming experience, farm size, access to extension services, social networks, access to climate change information, challenges on climate change mitigation, and coping strategies employed by the farmers were indicated to significantly influence farm income among the smallholder farmers in the study area. Therefore, the promotion of sustainable agricultural practices and bridging the knowledge-practice gap can strengthen farmers’ adaptive capacity against climate change effects.