This paper aims to contribute to the understanding of climate risks and vulnerability facing cotton farmers in semi-arid regions of Pakistan. Given the ever-increasing climate change impacts on cotton production in Pakistan, especially in semiarid regions where water scarcity puts additional pressure on water sensitive agricultural livelihoods, we have conducted this study to identify climate risks facing cotton farmers in two semi-arid districts of Punjab province (average annual contribution to total cotton production is 80%), based on various climate indicators (such as temperature, rainfall and climate extremes.). A mix of qualitative and quantitative methods has been used to explore factors of vulnerability and comparative vulnerabilities. In the cotton production stage, we found that vulnerability to climate change decreases with increase in the size of the landholding, mainly because large farmers have more financial resources at their disposal to deal with adverse climate impacts, such as crop damages and losses. Adaptive capacity, on the other hand, is found to be one of the significant factors determining the overall vulnerability at the household level, as level of exposure and sensitivity do not differ across different sized households. In other words, indicators of adaptive capacity, such as access to financial resources, diversified livelihoods and access to weather information plays a major role in reducing vulnerability against climate change.