We analyze whether foreign direct investment (FDI) has contributed to the typically wide income gaps in Latin America. We perform panel cointegration techniques as well as regression analysis to assess the impact of inward FDI stocks on income inequality among households in Latin American host countries. The panel cointegration analysis typically reveals a significant and positive effect on income inequality. There is no evidence for reverse causality. Our findings are fairly robust to the choice of different estimation methods, sample selection, and the period of observation.