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This study examines the livelihood vulnerability of a variety of rural households by calculating the livelihood vulnerability index (LVI) with reference to the IPCC vulnerability framework and the sustainable livelihoods framework (SLF). The index consists of household parameters of all the three dimensions of vulnerability such as exposure, sensitivity, and adaptability. Respective indicators were based on a literature review and discussions with residents. We explored the variables with significant explanatory power for households' LVI by means of a multiple linear regression model using latent variables. Data for desired parameters for LVI was collected from 540 randomly selected households in 35 villages of Gannan Plateau (in the east margin of Qinghai-Tibet Plateau) through face-to-face interviews. The present study highlights that livelihood vulnerability between households with different socioeconomic characteristics is far from equivalent because of uneven exposure, sensitivity, and adaptability of climate change. Moreover, at the regional level, adaptability and exposure have a higher explanatory value than sensitivity. The urgent need to reduce the high exposure to climate risks such as blizzard and drought improve the level of livelihood diversification and enhance the ability of farmers to make flexible use of all kinds of livelihood capital are essentially required for reducing both current and future community vulnerability to climate change and advancing sustainable livelihood. It also facilitates the adaptation strategies of other communities around the globe will face similar ecological and economic challenges as they deal with the impacts of global climate change.