The aim of this research was to investigate how income inequality impacts the economic growth of Ethiopia by analyzing the various ways in which it influences economic growth. The study gathered an exclusive dataset from diverse secondary sources that ranged from 1981 to 2016. To examine the link between transmission channels, inequality of income, and growth, the study utilized a stepwise regression autoregressive distributed lag (ARDL) approach. The research concluded with four lines of reasoning, including political economy, innovation, fertility, and saving channels. According to the findings, inequality of income has a positive impact on innovative activities and total savings as measured by gross fixed capital formation, but it only has a negative and significant effect on economic growth through the channels of innovation and savings. While caution should be taken when generalizing the findings to other countries, this study offers valuable insights into the intricate link between income inequality and economic growth specifically in Ethiopia. The study recommends that policymakers implement targeted policies to address the different transmission channels through which income inequality affects economic growth, to comprehensively tackle this issue.