The study was undertaken to examine the impact of income inequality has on the well being of rural households in Imo State. Multistage sampling technique was used in the selection of two hundred (200) household heads. Structured interview schedule was developed to obtain information from the respondents. The data collected were analyzed using descriptive statistics, Gini coefficient based decomposition, Sen’s Welfare Index and Spearman’s Rank Correlation, and the Coping Strategies Use Index (CSUI). The findings showed that the average age of the household heads in the study area was 51 years; with farming as major occupation. Indicators of well being used were: housing type, housing material, source of drinking water, health facility, lighting source, and type of cooking materials. Results revealed that there was a low level of well being of households from the welfare indicators considered. The income inequality as reflected by the Gini coefficient (0.47) shows a moderately high level of inequality in income of the respondents. Income inequality is negatively correlated with welfare indicators. This implies that income inequality impacts negatively on the well being of members of the households.