A rotary impact tool includes a drive power source for producing rotational power, a drive shaft driven by the rotational power supplied from the drive power source, an output shaft operatively connected to the drive shaft for receiving the rotational power, an impact mechanism operatively couplable with the drive shaft. The rotary impact tool further includes a changeover unit for changing over an impact mode in which the impact mechanism is operated and a drill driver mode in which the rotational power produced by the drive power source is transferred to the output shaft without operating the impact mechanism and a multi-stage speed reduction mechanism for transferring the rotational power produced by the drive power source to the output shaft through the drive shaft at variable speeds in at least three speed modes including a low speed mode, a middle speed mode and a high speed mode.