Abstract: Based on data of Shandong Province from 2000 to 2020, using PVAR model, impulse response function, variance decomposition, Granger causality test and other methods were used to conduct an empirical study on relationship with farmers' income．Results showed that agricultural mechanization could effectively promote farmers' wage income and operating income, which was conducive to growth of farmers' income, but its effect had a certain time lag．By comparing impulse response image and variance decomposition results, it showed that current development of agricultural mechanization in Shandong Province has a greater effect on farmers' wage income than on farmers' operating income．In view of this, some suggestions were put forward, such as giving play to role of agricultural machinery subsidies according to local conditions and strengthening farmers' technical education and training, in order to form a good interactive relationship between agricultural mechanization and farmers' income growth in Shandong Province．