Desiccation of river channels, resulting from low inflows, is among the major shocks affecting household livelihoods in the Okavango Delta, Botswana. Household coping and adaptive strategies against this shock are believed to be inadequate owing to changes in policy, land use and environmental conditions. This paper aims to improve knowledge on household capacity to adapt to desiccation in the Okavango Delta. It identifies and assesses the impacts of desiccation on rural livelihoods, the household strategies, and the impacts of institutional changes on household responses. Informed by the sustainable livelihood and socio-ecological frameworks, the study used a survey of 526 households and other qualitative methods. The results show that desiccation adversely affected livelihood activities. Household responses included livestock relocation to wetter areas, livelihood diversification, digging of wells and boreholes, and switching from flood recession to rain-fed cultivation. Land use and institutional changes inhibited household adaptation to desiccation. Additionally, households did not sufficiently use opportunities resulting from desiccation. The study concludes that the ability to capitalise on opportunities created by climatic shocks needs to be developed at all levels, as this can improve adaptation to the impacts of, and reduce losses from, future climate variability and change in Botswana and other developing countries.