The objective of the present study was to measure income inequality and to analyze determinants of income inequality of the households in the study area conducted in three villages Madinaabad, Shamshikhan, and Ziarat were randomly selected from the Lower Dir district. Data were randomly collected from 82 sample households with the help of an interview schedule. Ginicoefficient, Palma ratio was used to measure income inequality in the selected area while Lorenz curve was used to represent income and inequality. A logistic regression model was used for analyzing the determinants of income inequality of the households in the research area. Results of the study revealed that the value of Gini-coefficient for villages Madinaabad, Shamshikhan, Ziarat and for the overall area were 0.22, 0.30, 0.34, and 0.31 while Palma ratio for villages Madinaabad, Shamshikhan, Ziarat, and for the overall area were 0.63, 0.88, 1.14 and 1.06, respectively. Results of binary logistic regression showed that the odds ratio of age, education and the number of dependents was 1.084, 0.862, and 0.306, respectively, which showed that income inequality increases with the increase of one year of age by 8.4 percent. In contrast, education and earners decrease income inequality in the research area. Based on research findings, providing quality education and proper use of land resources can reduce income inequality in the study area.