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The contribution of forest and wild products to the rural economy is typically undervalued in standard socioeconomic surveys. In this paper, we analyze the contribution of forests and other wild areas to the subsistence and cash incomes of rural households for a large sample of households in western Uganda (N = 521) and explore the role of these typically underestimated income sources in interhousehold measures of income inequality. We find that households in rural Uganda derive 26% of total household income from forests and other wild areas including fallows, agricultural lands, wetlands, grasslands, and shrub land. In general, households in the lower income quartiles are more dependent on forest and wild products for subsistence income, whereas wealthier households are more engaged in the sale of higher value forest products for cash income. Forests, fallows, and agricultural lands are the most important sources of environmental income for households in western Uganda. Income from forest and wild products plays an important role in reducing income inequality between households. The loss of this income due to deforestation and environmental degradation has implications for rural livelihood portfolios and for the well-being of relatively poor households.