The economy of the district is predominantly based on agriculture and marine products. Though the district is industrially backward, some traditional industries based on coir and coir products, marine products, handloom, different type of handicrafts, toddy tapping, etc., are dominating from the very early times. The district is known as the traditional home of coir industry in Kerala.

The availability of plenty of raw materials and existence of backwaters and canals suitable for the getting of green husk and accessibility of transportation are the main factors of the development of this industry. Arabs had carried on trade of coir products from very ancient period. The   manufacture of mats and mattings was first introduced  in 1859 by Mr. James Durragh, an American who was the organiser of the firm named M/s Durragh Smail Ltd., at Alappuzha, London and New York.

The Coir Board was established by the Central Government under the provisions of the Coir Industry Act, 1955. There is a Coir Research Institute functioning at Kalavoor. The National Coir Training and Designing Centre was also established at Alappuzha in 1965.

In early period, Alappuzha proper was considered as the Venice of the east and the interior of the district paved way for its overall development. Consequent on the importance of Kochi, the Queen of the Arabian Sea, the development of Alappuzha was considerably retarded. Of late, there is a ray of hope of industrial development in the district consequent to the opening of the new rail link with Ernakulam, the Commercial capital of Kerala. Within the next few years, Alappuzha district may take its old position, provided the working class give a favorable climate for industrial expansion.

Coir is the most important commodity manufactured in Alappuzha, Kayamkulam, Kakkothamangalam, Komalapuram, Mannancherry, Muhamma and Vayalar , Coir products in Cherthala and Mannancherry, Lime shell in Arookutty and Kodamthuruthu, Plywood in Chengannur, Keltron controls in Aroor, Potassium Chloride in Mavelikkara and coconut in Thanneermukkom. The other important commodities manufactured in these towns are copra, coconut oil ,glass, mats marine food,  matches etc.