The inflation targeting regime, by emphasizing transparency, accountability, and anchoring inflation expectations, leads to improved inflation control, a reduction in economic instability, and the creation of a favorable environment for economic growth, productive investment, and lower income inequality. Therefore, the objective of the present study is to investigate the role of inflation targeting in income distribution across a sample of 39 countries, including 7 inflation-targeting and 32 non-inflation-targeting countries, using a difference-in-differences approach over the period 1995–2023. The findings indicate that the implementation of an inflation-targeting regime has a negative and statistically significant effect on the Gini coefficient, thereby reducing income inequality in the treatment-group countries relative to the control group. In addition, per capita GDP, the share of the agricultural sector in GDP, and foreign direct investment have negative and significant effects on income inequality, while the trade share of GDP has a positive and significant effect. Overall, the results suggest that adopting an inflation-targeting regime in countries experiencing high inflation and ineffective monetary policy frameworks can mitigate the adverse effects of inflation on income distribution. Thus, it is recommended that central banks in such countries implement an inflation-targeting framework to enhance macroeconomic stability, promote investment, and reduce income inequality.