In a number of sub-Saharan African countries, farm input subsidies are currently implemented in order to stimulate farm-level fertiliser application, enhance food security, improve household income and alleviate poverty. In this paper, a computable general equilibrium (CGE) model and the Foster, Greer and Thorbecke (FGT) method are employed to explore the extent to which fertiliser subsidies improve household income and reduce poverty in Malawi. Modelling results suggest that fertiliser subsidies lead to small increases in income distribution of all agricultural households. Rural non-agricultural households experience reductions in their incomes, while there are no income changes for metro households. The results of the FGT decomposition of poverty suggest that the subsidies help to reduce income poverty for rural and urban agricultural households, as well as for urban non-agricultural households. However, the poverty situation of rural non-agricultural households worsens, while no poverty changes occur in the case of metro households.