The relationship between poverty incidence and road development is analyzed in this paper, in the context of rural Laos. The results indicate that improving road access is an effective way of reducing rural poverty. Between 1997-98 and 2002-03, rural poverty incidence in Laos declined by 9.5 per cent. The results suggest that about 13 per cent of this decline can be attributed to improved road access to areas already having dry season access. There is now a high return to providing dry weather access to the most isolated households of Laos - those with no road access at all.