The economy of Itanagar is basically agrarian in nature and a large section of the population depends on agriculture. Apart from agriculture, some of the other factors that contribute to the economy of the region include handloom and handicraft, weaving and tourism.

Climate and topography of Itanagar id preferable for the cultivation of wheat, rice millet, pulses, potatoes and sugarcane. The people of the region mostly practice Jhum cultivation and terrace farming. The agro-climatic conditions of Itanagar is also favorable for horticulture, that produces tropical and sub-tropical fruits like Pineapple, Apple, Orange Plums, Pear, Walnut, Chestnut, Guava and many more. Other major horticultural products in Itanagar are spices, bamboo aromatic and medicinal plants, cardamom, ginger and mushroom.

The handloom and handicraft industry also contributes to a good amount of revenue to the economy of the state. The handloom and handicraft industry is one of the major small scale industries in Itanagar. Handloom is the primary occupation of the women folk of the region. The handloom items prepared by the people of this part of the country includes Shirt (Galuk), Scat (Gale), side bag cotton shawl, curtain cloth and many more.

The handicraft industry consists of products made of bamboo and cane. products made of bamboo and cane. Weaving, carpet making, ornament making, wood carving, carpentry, pottery also comprises of the handicraft industry in Itanagar Some of the handicraft items Some of the handicraft items includes: Ladies Hat, Haversack, Wooden statue, Wooden Fruit bowl, Wooden Saydor, Wooden Ashtray, traditional bangles, Tankha Painting and lots more.