This study addresses the role of climate variability in the livelihoods of agricultural communities in Ningxia, Northwest China. Data sources comprise meteorological observations and official reports, complemented by questionnaires and focus group discussions designed around a livelihoods framework. Sample villages were located in three different agricultural systems: irrigated, mixed irrigated/grazing, and rainfed. Much of Ningxia is perennially dry and this is a significant limiting factor to agricultural production in the region, exacerbated by drought and buffered by irrigation mainly supplied from the Yellow River. Climate observations show stable temperatures from the 1950s to the 1980s followed by a positive trend (0.38°C/decade 1961–2010). Precipitation shows very modest trends and low decadal variability. Recent climate variability, particularly a drought from 2004–2006, was perceived to have had a significant effect on agricultural production and access to water, but it was not the only challenge respondents had faced. Susceptibility to drought was higher in the mixed irrigated and grazing and rainfed areas, due to farmers’ greater exposure to climatic hazards and because a higher proportion of their income originated from farming activities. Respondents were using a wide range of measures to retain and enhance soil moisture and maintain agricultural production. The discussion examines challenges in disentangling the role of climate within rapidly changing livelihood systems.