Whether climate variations affect income distribution has received widespread scientific interest. This paper focuses on the impacts of climate change-induced aridity on income inequality using two measures of drought, the Aridity Index (AI) and the Standardized Potential Evapo-Transpiration Index (SPEI) and country-level panel data from 165 countries for the period 1999-2019. The analysis reveals that increased drought reduces the income share of the poorest while increasing that of the wealthiest 10% and 1%. We identify agricultural production and migration flows as the most significant drivers behind this phenomenon. To ensure accuracy, we employed a dynamic panel model and spatial econometric techniques to account for the interdependence between income inequality and both time and location.