Adaptation is undeniably crucial to address the complex issues and impacts of climate change at all levels in Nepal. The favorable policies and adaptive capacities of the communities are equally important to adapt to the climatic risks and hazards. The policies such as NAPA, national climate change policy and LAPA have been formulated in Nepal to address these climatic risks and hazards at national and local levels. Correspondingly, the communities and institutions are also adapting through their own efforts and initiatives. These institutions have contributed vital roles in policy formulation and effective implementation of adaptation plans and strategies as guided by NAPA and LAPA. This review paper has explored and analyzed the climate policies in Nepal, strengths and gaps in such policies, roles of local institutions in the policy formulation and effective implementation of adaptation plans and strategies. It has reviewed and analyzed the existing literature relating to climate change policies and adaptation plans and strategies. The paper highlights the climate policies, followed by roles of institutions in effective adaptation and the analysis of climate change adaptations especially focusing on mobility, storage, livelihood diversification, communal pooling and market exchange.