This study attempts to examine the sources of income inequality and compare the results with findings of previous study. The study also investigate factors contributing to total poverty in Thailand in 1988. Data used in this study are from the Socio-economic Surveys conducted in 1988. The income concept is per capita total current income. Households are decomposed into three groups, classified by employment-related factors (socio-economic class, occupation of head, and economic sector), regional factors (region and location), and demographic factors (age of head, sex of head and education of head). The decomposition of income inequality and poverty are estimated by employing Shorrockss index and Foster-Greer-Thorbecke index. During 1975/76, 1981 and 1988, the results of sources of income inequality show that the highest contributions to the total inequality are those of the employment-related factors, followed by the regional factors and the least contributions are generally those of demographic factors the between-group contributions of all classifying factors, except age of head and sex of head, increase over time. On the contrary, the Within-group contributions decrease overtime, except in the case of age of head and sex of head, Overall the income distribution in Thailand has deteriorated during 1975/76, 1981 and 1988. Considering the estimates of the poverty incidence, this study uses both unadjusted poverty lines (4,076 and 6,203 baht per capita per year for rural and urban areas respectively) and adjusted poverty lines (6,868 and 10,382 baht per capita per year for rural and urban areas respectively) in analyzing the decomposition of poverty. Using the unadjusted poverty line, it is found that 25,93 and 13.33 percent of the total population in rural areas and urban areas respectively live in poor households. Applying the adjusted poverty lines, the poverty incidence rises to 55.50 percent and 30.12 percent respectively for rural and urban areas. To delineate factors contributing to total poverty in Thailand, households are classified by the regions, ages of head, sexes of head, education of head, socio-economic classes, occupations of head, and economic sectors, In both rural and urban areas, households which contribute most to the total poverty are in the following groups. 1. By Regions, the Northeast contributes most to total poverty. 2. When classified by ages of household heads, the highest percentage contribution comes from those in the age group 30-39. 3. When classified by sexes of household heads, the highest percentage contribution comes from those headed by males. 4. By education, household heads with lower-elementary education contribute most to the total poverty. 5. By socio-economic classes, the highest percentage contribution comes from farm operators with owned land. 6. By occupations of heads, the highest percentage contribution come from agriculturists. 7. By economic sectors, the agricultural contributes most to the total poverty. In both rural and urban areas, households with least contribution to the total poverty can found to be in the following groups. 1. When classified by regions, the BMR contributes least to the total poverty for rural areas. For the urban areas, the least contribution comes from the South. 2. By ages of household heads, the least percentage contribution are found in those with less than 20 years. 3. By sexes of household heads, the least percentage of contribution come from those headed by females. 4. By education of heads, those with university education contribute least to the total poverty. 5. By socio-economic classes, the least percentage contribution are those in professional, technical and managerial categories. 6. By occupations, the least percentage contribution are in household with heads working as administrators, executives and managers. 7. By economic sectors, the non-agricultural contributes least to the total poverty.