The main goal of this study is to characterize climate change adaptation in developing countries context. To this end, the concept and causes of climate change, climate change and variability, impacts and adaptive responses of climate change have been reviewed. Besides, adaptive capacity to climate change and variability and the roles of institutions in the process have been presented. In order to examine the characteristics of local level adaptive responses of farmers and local level institutions against climate change in drought-prone contexts, a case study from lowlands of Sidama, Southern Ethiopia, has been also presented. To realize this, 401 randomly selected smallholder rural farmers were involved through structured questionnaire. Additional data were also collected by key informant interviews and focus group discussions. Rainfall and temperature data were also collected from Ethiopian National Meteorological agency. The findings revealed that rainfall had declined in the last three decades and the households used both coping and adaptive strategies to deal with the adverse impacts. The coping responses degraded farmers’ resource bases and had become maladaptive practices. Furthermore, local institutions were unable to transform farmers’ coping strategies into sustainable adaptive practices. Thus, there is an urgent need to strengthen local level institutions without which local level climate change intervention is less likely to succeed.