UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT
INVESTMENT COMPANY

FORM N-Q

Item 1.                         Schedule of Investments.

STATEMENT OF INVESTMENTS
Dreyfus Municipal Income, Inc.
December 31, 2016 (Unaudited)

STATEMENT OF INVESTMENTS (Unaudited) (continued)

STATEMENT OF INVESTMENTS
Dreyfus Municipal Income, Inc.
December 31, 2016 (Unaudited)

The following is a summary of the inputs used as of December 31, 2016 in valuing the fund’s investments:

†   See Statement of Investments for additional detailed categorizations.
†† Certain of the fund’s liabilities are held at carrying amount, which approximates fair value for financial reporting purposes.

NOTES

The Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification is the exclusive reference of authoritative U.S. generally accepted
accounting principles (“GAAP”) recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the Securities and Exchange
Commission (“SEC”) under authority of federal laws are also sources of authoritative
GAAP for SEC registrants. The fund’s financial statements are prepared in accordance
with GAAP, which may require the use of management estimates and assumptions.
Actual results could differ from those estimates.

The fair value of a financial instrument is the amount that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy
that prioritizes the inputs of valuation techniques used to measure fair value. This
hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements).

Additionally, GAAP provides guidance on determining whether the volume and activity
in a market has decreased significantly and whether such a decrease in activity results in
transactions that are not orderly. GAAP requires enhanced disclosures around valuation
inputs and techniques used during annual and interim periods.

Various inputs are used in determining the value of the fund’s investments relating to
fair value measurements. These inputs are summarized in the three broad levels listed
below:

Level 1—unadjusted quoted prices in active markets for identical investments.

Level 2—other significant observable inputs (including quoted prices for similar
investments, interest rates, prepayment speeds, credit risk, etc.).

Level 3—significant unobservable inputs (including the fund’s own assumptions in
determining the fair value of investments).

The inputs or methodology used for valuing securities are not necessarily an indication
of the risk associated with investing in those securities.

Changes in valuation techniques may result in transfers in or out of an assigned level
within the disclosure hierarchy. Valuation techniques used to value the fund’s
investments are as follows:

Investments in securities are valued each business day by an independent pricing service
(the “Service”) approved by the fund's Board Members (the "Board") Investments for
which quoted bid prices are readily available and are representative of the bid side of the
market in the judgment of the Service are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and asked prices (as
calculated by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities) are carried at

NOTES

fair value as determined by the Service, based on methods which include consideration
of the following: yields or prices of municipal securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market conditions.
All of the preceding securities are generally categorized within Level 2 of the fair value
hierarchy.

The Service is engaged under the general supervision of the Board.

When market quotations or official closing prices are not readily available, or are
determined not to reflect accurately fair value, such as when the value of a security has
been significantly affected by events after the close of the exchange or market on which
the security is principally traded, but before the fund calculates its net asset value, the
fund may value these investments at fair value as determined in accordance with the
procedures approved by the Board. Certain factors may be considered when fair valuing
investments such as: fundamental analytical data, the nature and duration of restrictions
on disposition, an evaluation of the forces that influence the market in which the
securities are purchased and sold, and public trading in similar securities of the issuer or
comparable issuers. These securities are either categorized within Level 2 or 3 of the fair
value hierarchy depending on the relevant inputs used.

For restricted securities where observable inputs are limited, assumptions about market
activity and risk are used and are generally categorized within Level 3 of the fair value
hierarchy.

Inverse Floater Securities: The fund participates in secondary inverse floater
structures in which fixed-rate, tax-exempt municipal bonds are transferred to a trust (the
“Inverse Floater Trust”). The Inverse Floater Trust typically issues two variable rate
securities that are collateralized by the cash flows of the fixed-rate, tax-exempt municipal
bonds. One of these variable rate securities pays interest based on a short-term floating
rate set by a remarketing agent at predetermined intervals (“Trust Certificates”). A
residual interest tax-exempt security is also created by the Inverse Floater Trust, which is
transferred to the fund, and is paid interest based on the remaining cash flows of the
Inverse Floater Trust, after payment of interest on the other securities and various
expenses of the Inverse Floater Trust. An inverse floater security may be collapsed
without the consent of the fund due to certain termination events such as bankruptcy,
default or other credit event.

The fund accounts for the transfer of bonds to the Inverse Floater Trust as secured
borrowings, with the securities transferred remaining in the fund’s investments, and the
Trust Certificates reflected as fund liabilities in the Statement of Assets and Liabilities.

The fund may invest in inverse floater securities on either a non-recourse or recourse
basis. These securities are typically supported by a liquidity facility provided by a bank or
other financial institution (the “Liquidity Provider”) that allows the holders of the Trust
Certificates to tender their certificates in exchange for payment from the Liquidity
Provider of par plus accrued interest on any business day prior to a termination event.
When the fund invests in inverse floater securities on a non-recourse basis, the Liquidity

NOTES

Provider is required to make a payment under the liquidity facility due to a termination
event to the holders of the Trust Certificates. When this occurs, the Liquidity Provider
typically liquidates all or a portion of the municipal securities held in the Inverse Floater
Trust. A liquidation shortfall occurs if the Trust Certificates exceed the proceeds of the
sale of the bonds in the Inverse Floater Trust (“Liquidation Shortfall”). When a fund
invests in inverse floater securities on a recourse basis, the fund typically enters into a
reimbursement agreement with the Liquidity Provider where the fund is required to
repay the Liquidity Provider the amount of any Liquidation Shortfall. As a result, a fund
investing in a recourse inverse floater security bears the risk of loss with respect to any
Liquidation Shortfall.

At December 31, 2016, accumulated net unrealized appreciation on investments was
$21,531,912, consisting of $22,015,808 gross unrealized appreciation and $483,896 gross
unrealized depreciation.

At December 31, 2016, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the Statement of
Investments).

Additional investment related disclosures are hereby incorporated by reference to the
annual and semi-annual reports previously filed with the SEC on Form N-CSR.

Item 2.             Controls and Procedures.

(a)        The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-Q is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-Q is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b)        There were no changes to the Registrant's internal control over financial reporting that occurred during the Registrant's most recently ended fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. 

Item 3.             Exhibits.

(a)        Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.

FORM N-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dreyfus Municipal Income, Inc.

By:       /s/ Bradley J. Skapyak

            Bradley J. Skapyak

            President

Date:    February 14, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:       /s/ Bradley J. Skapyak

            Bradley J. Skapyak

            President

Date:    February 14, 2017

By:       /s/ James Windels

            James Windels

            Treasurer

Date:    February 14, 2017

EXHIBIT INDEX

(a)        Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.  (EX-99.CERT)