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It is evident that agriculture of Nepal is the most sensitive sector to climate change, and adaptations are essential for protecting the livelihood of rural poor farmers and ensuring their food security. Farmers are adopting different practices with climate awareness and sometime with spontaneity. In this chapter, we examined whether these climate change adaptation responses are adaptive and innovative and take into consideration existing and projected climate change and variability. Based on the review of adaptation theories and innovation approaches, researchers primarily draw a climate-adaptive agricultural innovation framework. We looked at empirically captured adaptation practices and analyzed their climate adaptive nature based on productivity, resilience, and equity. This study blends both qualitative and quantitative methods—combining case study of rice-wheat system with quantitative survey from four different regions of Terai, Nepal. The study shows that while agricultural system demonstrates a number of practices that contribute to adaptation, there are fundamental institutional, technological, and policy challenges that restrict the prospect of agricultural innovation required to adapt to changing climate.