The economy of Pasighat is a mix of agriculture, government services, local commerce, and growing tourism. Because it is the administrative center for the East Siang district, public administration, education, and healthcare are among the largest sources of formal employment.
Agriculture remains the backbone of the broader district economy, with Pasighat serving as the primary market and distribution hub for local produce. Recently, the city has seen economic stimulation through the Smart City Mission, which has injected funds into construction, infrastructure, and urban modernization, creating numerous local jobs. The cost of living is moderate compared to major Indian metropolises, though the cost of transported goods can be higher due to the region's remote geography.