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Agriculture, fishing, cattle-breeding, and tourism are the main economic sources of the inhabitants in Lipsi. Wine is largely produced in Lipsi and particularly the variety of the red semi-sweet wine. In summer, there is a wine festival in the village square with many attendants.
The wine of Lipsi is so famous that, during the Italian occupation of the Dodecanese islands (first half of the 20th century), it was sent to the Vatican to be used in the Holy Masses.
Another product of Lipsi is cheese, particularly the mizithra cheese, made of local animals. The inhabitants also produce honey, fruits, and vegetables. At the port, there are many taverns where you can enjoy the traditional delicacies of Lipsi.