The relationship between rural industry integration and farmers’ income increase has been analyzed in this paper. To this end, a novel index system for evaluating the level of rural industry integration in Zhejiang province has firstly been designed, and this rural industry integration level can be measured accordingly. Subsequently, to select the independent variables of the farmers’ income, a new Grey Relational Analysis Model (GRA) is proposed based on panel data, which is modified by comprehensively utilizing the increments of the time and index dimensions. By using this proposed grey model, explanatory variables will be determined among a range of influencing factors, including the rural industry integration level. Lastly, in order to reveal the Income-growth effects of the rural industry integration, the Panel Data Regression Model (PDRM) is introduced to conduct the experimental studies of 11 cities in Zhejiang province. The experimental results show that strong relationships exist between farmers’ income and rural industry integration, urbanization level, agricultural investments, and GDP. Furthermore, the higher the integration level is, the faster the farmers’ income grows. Besides, the farmers’ income increase also has positive relationships with the other three independent variables. Accordingly, some suggestions are offered to improve further the level of the rural industry integration in Zhejiang province so that it can promote the development of the family farm.