Abstract: When striving to promote the green and high-quality development of agriculture, can policy incentives effectively guide the formation of ecological values and promote the application of organic fertilizer by farmers? Existing studies have not provided corresponding evidence. This article explored the relationships between policy incentives, ecological cognition, and organic fertilizer application by farmers to provide a useful reference for understanding organic fertilizer application by farmers, promote the substitution of organic fertilizer for chemical fertilizer, and realize the green development of agriculture. This study had specifically developed two aspects. First, it analyzed the mechanisms of policy incentives on organic fertilizer application by farmers from the perspective of ecological cognition and examined the decision-making mechanism of the farmers. Second, it considered the differences in the economic level of farmers. Low-income farmers had a lower ability to pay and bear risks; therefore, even if they were willing to adopt organic fertilizers, they struggled to translate this willingness into action. Thus, household income should be included in the analysis framework. Based on the survey data of 758 rice farmers in Hubei Province, this study used the entropy method to measure the ecological cognition of farmers and verified the influence mechanisms of policy incentives, ecological cognition on organic fertilizer application by farmers by constructing a moderated mediation model. This study focused on the mediating effect of ecological cognition in the process of policy incentives affecting organic fertilizer application by farmers and the moderating effect of household income in the process of policy incentives affecting organic fertilizer application by farmers through ecological cognition. The results showed that: 1) policy incentives had a significant positive (P < 5%) impact on organic fertilizer application by farmers. Government propaganda, training, and subsidies encouraged organic fertilizer use. 2) Ecological cognition played a partial intermediary role between policy incentives and organic fertilizer application by farmers, suggesting that policy incentives positively impact organic fertilizer applications via improved ecological cognition. 3) The indirect effect of policy incentives on organic fertilizer application by farmers through ecological cognition was positively regulated by household income. Increased household income significantly enhanced the influence of policy incentives on organic fertilizer application through ecological cognition. Based on these results, this study proposed the following policy implications. It is necessary to implement organic fertilizer policy incentives and to strengthen the role of the government in organic fertilizer promotion. The government should also consider ecological cognition of farmers when promoting organic fertilizers application. In the early promotion stages of organic fertilizer technology, high-income farmers can serve as an entry point to rapidly expand the use of organic fertilizers. Conversely, low-income farmers may represent difficult targets for future organic fertilizer promotion. Increased subsidies for the application of organic fertilizers to low-income farmers may help to reduce their economic risks.