Understanding the mechanism through which agricultural mechanization impacts farmers' income holds significant theoretical and practical implications for advancing common prosperity and rural revitalization. This study employed statistical data from 30 provinces, autonomous regions, and municipalities in China from 2003 to 2020, utilizing a two‑stage least squares (IV—2SLS) model with instrumental variables to examine this relationship. The findings revealed that agricultural mechanization has a significant influence on farmers' income, exhibiting an inverted “U‑shaped” relationship. To this regard, farmers' income initially increased as the agricultural mechanization level improved, but declined once demand for agricultural machinery approached saturation. The scale of operation and labor transfer further amplified the regulatory effects of agricultural mechanization on farmers' income. Heterogeneity analysis indicated that the impact of agricultural mechanization on farmers' income was pronounced in major grain‑producing regions but negligible in non‑major grain‑producing areas. Based on these findings, the study recommends that policymakers actively optimize urban and rural employment conditions to encourage non‑agricultural employment of surplus rural labor, promote moderate‑scale agricultural operations, and improve the level of agricultural mechanization to sustainably increase income for farmers. Concurrently, tailored agricultural mechanization development policies should be formulated to address the specific production conditions of different grain production functional areas.