The article examines the effects and mechanisms of inclusive finance on relative poverty using the data from 2019 China Household Finance Survey (CHFS). The results are as follows. Firstly, inclusive finance has a significant inhibitory effect on the relative poverty of resident households. Secondly, inclusive finance can reduce relative poverty by alleviating household’ financial constraints and promoting flexible employment and improving ability of undertaking risks. Thirdly, the effect of inclusive finance on relative poverty is greater in tier 2 cities and tier 3 cities, and western and northeastern regions, as well as rural households and agricultural registered residence, and households with family members not working in the system and without party members. Fourthly, the development of both traditional inclusive finance and digital inclusive finance can effectively reduce relative poverty in households, but at this stage, traditional inclusive finance has a greater effect on alleviating relative poverty than digital inclusive finance. The research conclusions can provide reference for promoting the high-quality development of inclusive finance and alleviating relative poverty.