Abstract: Collectively operated construction land is an important asset of farmers’ collectives, and its market entry reform is a key measure to activate rural land resources and expand farmers’ income channels. Based on county-level panel data in China from 2010 to 2023, this study employs a multi-period difference-in-differences model to empirically examine the impact of the market entry of collectively operated construction land on farmers’ income and its underlying mechanisms. The results indicate that: 1) the market entry reform significantly increases farmers’ income, and the findings are robust across multiple tests; 2) the market entry reform enhances farmers’ income by optimizing employment structure, promoting entrepreneurial activities, and expanding asset investment; 3) the policy effect exhibits regional heterogeneity, with stronger income-promoting effects in areas with higher local fiscal capacity and in low-income regions. The study suggests that the rights and financing functions of land entering the market should be further strengthened, the industrial orientation of land supply clarified, and the level of market-based land allocation improved, in order to fully realize the income-enhancing potential of the market entry policy.