Bhutan is a mountainous landlocked country with a varying climate and rich biodiversity. Despite significant economic progress being made over recent years Bhutan remains a least developed nation with constraints and vulnerabilities adversely affecting its capacity to cope with climate change.The authors recognise that Bhutan’s vulnerability is heightened by low economic strength, inadequate infrastructure, lack of institutional capacity and an agro-based rural economy. Impacts of climate change will have significant implications for the overall development of Bhutan. Six major areas have been considered as most vulnerable to the effects of climate change: forests and biodiversity, agriculture, water resources, glacial lake outbursts, health and landslides. It has also been found that a temperature increase of just 2°C would shift the cultivation zone to higher elevations, but land at this altitude is steep and therefore unsuitable for agriculture.National communication has highlighted measures likely to increase both development and the capacity to adapt to climate change, and reduce vulnerability:Land use planning: promotion of afforestation in degraded areasCommunity involvement: developing awareness of more sustainable water resource usageAlternative crop development: utilising more resilient varieties for extreme temperatures and limited landCommunity based forest management: promoting the proper use of ecosystems including land and water conservation.The authors identify areas for further research including development of a more sustainable socio-economic system and development of more resistant tree species. In addition to this, Bhutan has initiated the preparation of its National Adaptation Programme of Action (NAPA) which will simultaneously address climate change impacts and sustainable development.