This study has evaluated the impact of MGNREGA on income generation and labour supply in agriculture in one of the districts in central dry zone of Karnataka. Results have shown that the number of days worked in a year with the implementation of MGNREGA programme has significantly increased to 201 days, reflecting 16 per cent increase. Regression analysis has revealed that gender, education and family size of the workers are the significant factors influencing the worker’s employment under the Program. The increase in income is to the tune of 9.04 per cent due to additional employment generated from MGNERGA. In the total income, the contribution of agriculture is the highest (63%), followed by non-agricultural income (29%) and MGNREGA income (8%). Implementation of MGNERGA works has led to labour scarcity to the tune of 53 per cent and 30 per cent for agriculture operations like weeding and sowing, respectively. There has been a decline in area for labour-intensive crops like tomato and ragi to the extent of 30 per cent due to MGNERGA implementation.