Building adaptive capacity against climate change is one of the central targets in adaptation responses. The ability to cope with the change in climate can be enhanced for the projected future climate change (end-point approach) or improved in the present systems to respond to stressors (starting-point approach). This paper reviews the understanding of and approach for assessing adaptive capacity in adaptation policy and the water sector in Malaysia. The findings of two national studies, which were carried out in the 1990s to address the potential impacts of climate change, were examined on the approaches of the adaptation measures for thewater sector. Therewas limited consideration on the capacity of the sector, both its current and future ability, to cope with future climate change as the proposed adaptation responses may not have been driven directly toward enhancing adaptive capacity to climate change. They would, however, if implemented, improve the ability to either moderate the potential damages or cope with the probable consequences of the projected change in future climate. The paper concludes with several critical factors that should be addressed in future research on adaptive capacity of the water sector in Malaysia.