In response to global climatic change and variability, adaptation to climate change has become a widespread global policy goal. It is currently seen as a solution to the likely negative effects of climate change, especially in developing countries. However, adaptation to climate change largely depends on the socioeconomic system’s adaptive capacity. In the urgency to achieve adaptation to climate change, this question has hardly been adequately explored. This chapter fills this gap by examining the prospects and challenges of community adaptation to climate change in developing countries through the case study of Malawi. The study findings demonstrate that community adaptation to climate change has the potential to stimulate and build productive local livelihood systems. However, its success is currently hampered by two things. First, there is lack of clear climate adaptation policy framework to guide community adaptation initiatives. Secondly, the existence of rampant household poverty and low institutional capacity makes it difficult to support community adaptation initiatives. This situation is exacerbated by unstable donor funding toward climate change adaptations. This chapter, therefore, argues that sustainable community adaptation to climate change in developing countries requires improving their social, economic, and institutional capacities.