The official statistics show that poverty in Odisha has reduced faster during the second period (2004-05 to 2011-12) compared to the first period (1993-94 to 2004-05). This paper attempts to study the impact of the public distribution system (PDS) on poverty reduction in Odisha during the 2nd period. The NSSO unit level data of the 61st (2004-05) and 68th (2011-12) rounds of consumer expenditure survey (CES) has been used for the estimation of poverty with and without income transfer through PDS. The PDS plays a vital role in poverty reduction in Odisha by raising the real income during the post-reform period, especially from 2004-05 to 2011-12.