There has been renewed interest during recent times in the impact of irrigation development on rural poverty. For long, researchers asked whether irrigation development reduces the poverty of irrigators. However, the question being asked now is: does investing in irrigation—rather than in other public works—help reduce rural poverty in a region? Using Government of Gujarat's 1997 census of Below Poverty Line (BPL) households as well as the Village Amenity Survey of the same year, this paper explores the interplay between irrigation development and rural poverty in 177 predominantly rural talukas, which is an administrative unit with a population of around 100,000-150,000 people, of Gujarat state in western India. Our analysis shows that for the design of poverty-targeting programs, two variables have the highest appeal: primary education infrastructure and improved land productivity through irrigation. It also suggests that, over the long run, irrigation benefits far transcend the command areas of irrigation systems. As a result, irrigation impact studies focused at farm or command area level seriously underestimate overall livelihood impacts of irrigation development. This is because intensively irrigated areas act as magnets that attract rural poverty from their surround, especially from other dry areas. Population pressure on farm lands thus tends to get redistributed according to the carrying capacity of farm lands. Across 177 predominantly rural talukas of Gujarat, we find: a) an inverse relationship between land use intensity and land-man ratio; and b) as land productivity (output/hectare of net sown area) declines, output per rural person declines too, but far more slowly than would have been the case without the “magnet effect.”