Climate change projections for the 21st century indicate an increase in the already high number of food-insecure people in India. While considerable research on vulnerability to climate change exists, research about Indian smallholder farming systems as a whole, encompassing farming strategies and development pathways in this context, is limited. Hence, the current study examines the vulnerability of three smallholder farming systems, namely, (i) crop without livestock (CWL), (ii) crop with small ruminants (CSR), and (iii) crop with dairy (CD), in the context of climate change in Telangana, India. A mixed methods approach was used to conduct the research with a sample size of ten households per farming system. We found that households of different farming systems faced differential vulnerability due to variation in perceptions of climate change exposures, access to livelihood capitals, and the farming strategies they chose. The CWL households were highly vulnerable to increased maximum temperature and erratic rainfall, while households that farmed both crop and livestock were more vulnerable to overall reduction in precipitation. Decision-making related to farming strategies was a complex process involving several factors, of which the availability of livelihood capitals, provided by government programs, was the foremost. Due to this, households of the different farming systems pursued divergent farming strategies, leading to varying types of adaptation and climate change resilience. Among the three farming systems, the households in the CWL system had the least access to all livelihood capitals and showed the highest vulnerability as their farm strategies only helped to cope with immediate needs. The households in the CD system had access to all critical livelihood capitals, which facilitated opting for sustainable farming strategies. However, as these households were highly dependent on scarce ground water resources for production, their strategies helped only short-term adaption. The households in the CSR system, despite having access to limited capitals, adopted long-term adaptation strategies which is attributed to them being a pastoral ethnic group. Lastly, despite the existence of an integrated climate change policy, state-level development programs continue to focus more on agricultural intensification than on climate change adaptation. This stimulates farming strategies that are lucrative in the short term but endanger farming system resilience to climate change in the long term. We therefore recommend policy makers to give high priority to climate smart development in state development programs, and science-based evaluations of these programs to enable proper climate change adaptation in dryland regions that is inclusive of perspectives of different populations.