The relationship between poverty incidence and road development is analyzed in this paper, in the context of rural Laos. The results indicate that improving road access is an effective way of reducing rural poverty. Between 1997-98 and 2002-03, rural poverty incidence in Laos declined by almost on tenth of the rural population. Over this same period road improvement was significant, providing all-season access to many areas previously having only dry season access. The analysis provided in this paper suggests that about 13 per cent of the poverty reduction can be attributed to improvements in road access.