Abstract: Cultivating and developing new types of agricultural business entities constitute a crucial initiative for fostering farmer engagement, enriching farmers, and revitalizing agriculture. Based on a panel data of 274 prefecture-level and above cities in China from 2003 to 2023, this study employs a two-way fixed effect and mediation models to empirically examine the impacts of cultivating new agricultural business entities on farmers’ income, the underlying mechanisms, and heterogeneity. Results show that cultivating new agricultural business entities has significantly enhanced farmers’ income. Mechanism tests demonstrate that cultivating new agricultural business entities can enhance farmers’ income through three pathways: promoting agricultural industrial agglomeration, driving agricultural technological progress, and expanding the scale of the agricultural industry. Heterogeneity analysis reveals that cultivating three specific types of new agricultural business entities, namely family farms, specialized large-scale farms, and agricultural cooperatives, exerts a stronger positive effect on farmers’ income, whereas the coefficient for leading agricultural enterprises is not statistically significant. In southern China and the Northeast and Central regions, cultivating new types of agricultural business entities had a stronger positive impact on farmers’ income. Local governments should continue to intensify support for nurturing new agricultural business entities, combine differentiated support with standardized guidance, and promote the cultivation and development of new agricultural business entities in accordance with local conditions.