The economy of the district is based on agro & food Processing, tourism, textile and mineral based industries (ceramics). The food Processing industry in the district has attracted 57% of the total investment in the district over the last two decades The district ranks first in the Country in Milk Production, the Asia’s Largest Dairy Cooperative under the Brandname of AMUL is Banaskantha District Cooperative Milk Producers’ Union Ltd., Palanpur known as Banas Dairy procuring almost 57,26,334 Lit. Milk on 30.12.2017 as Peak receipt. The Banaskantha is also first District having highest Cold Supply Chain of Milk by installing 1280 Bulk Milk Chilling units procuring almost >90% milk as Raw Chilled Milk & rest 10% in Cans. Banaskantha District having 1060 Village Dairy Coop. Societies certified as per ISO 9001 : QMS Standard. The district ranks first in the state in the production of vegetables contributing nearly 17.67% to the total vegetable production of Gujarat. It is the largest producer of potatoes in the state. Bajri, Maize, Tobacco, Castor oil, Jowar, Psyllium are the other major crops of the district. It is also one of the leading producers of Isabgul (Psyllium husk) in the country.

The district has rich mineral reserves including limestone, marble, granite, building stone and china clay. It accounts for almost the entire marble reserves (99.3%) of Gujarat and contributes about 15% to the total production of limestone in the state.

Banaskantha District Central Co-operative Bank is one of the most important banks of Gujarat.