There is a substantial body of literature that confirms the cyclical relationship between poverty and disability. However, while there are studies that have sought to understand the relationship between income poverty and disability and how disability intersects with other factors to influence poverty, most do not offer insight into how this relationship is shaped – particularly given the limited availability of panel data. Furthermore, there is limited research on the effect of social grants and employment on income poverty, as well as how disability intersects with other factors to shape poverty. Guided by the capabilities approach, the focus of this article was therefore on the dynamics of the relationship between disability and two aspects of poverty, namely, income and employment, which are critical to the realization of capabilities. The findings show that people with disabilities in South Africa are more likely to be income poor and remain so over time, but that social grants serve to alleviate income poverty. Income poverty is explained in part by the fact that people with disabilities are less likely to be employed and that when they are employed they face significant wage gaps. Disability also intersects with race, sex and geographic location to shape income poverty in ways that have important implications for policy and programme development.