Brazil is well-know for its very high level of inequality. Understanding the key determinants of this inequality is the principal aim of this study. In order to reach this purpose, the present work firstly sketches a poverty, inequality and welfare profile for Brazil and then investigates the main determinants of inequality by applying several decomposition techniques by using the annual Brazilian household survey for 2002. Numerous techniques are developed, split into two approaches: inequality decomposition by indexes and regression-based inequality decomposition. Using the first methodology, a decomposable class of inequality measures is analysed by considering households characteristics such as geographic location, gender, age and ethnicity. For regressionbased decomposition analysis, due to the large number of such methodologies, the present work limits the analysis to only a few of them. Field’s decomposition estimates the factor shares that mainly contribute to determine income inequality. The Oaxaca decomposition method splits income differential between given groups into two effects: endowment effect, which accounts for differences in characteristics, and treatment effect, which computes differences in structure. The second moment decomposition method enriches the study by analysing variance differentials. All of these decompositions investigate differentials by race and by region.