Global human development has improved, partly due to the transformative wave of globalization. However, despite progress in poverty reduction over the past two decades, recent United Nations SDG reports highlight substantial setbacks among developing countries, especially low- and middle-income economies. This study investigates the threshold impact of globalization benefits on poverty and demonstrates the non-linearity of the benefits to poverty at different regimes of institutional quality. The Hansen panel threshold model is employed to analyze data of 116 developing countries from 2000 to 2021, with complementary regional estimates. The reliability and validity of the findings are reinforced using panel-corrected standard errors and dynamic GMM estimators as robustness checks. The results establish non-linear poverty-reducing benefits of globalization, with more pronounced impacts under high global interconnectedness. Additionally, the study provides nuanced evidence of globalization’s diminishing marginal social welfare returns to poverty at higher thresholds of integration. Finally, it argues that strong institutions are essential to amplify globalization benefits towards achieving sustainable development goal 1 and to mitigate the negative externalities associated with intensified globalization.