Poor urban people in Bangladesh are already experiencing numerous climate-related problems because of their multiple forms of vulnerability and multiple sources of deprivation. Their problems differ greatly, both within and across settlements and cities, and so do the practices by which they are trying to tackle them. Various factors – physical, tenure-related, socio-political and institutional – contribute to this great variety of problems and practices. In this paper, we focus on Khulna City to identify the challenges facing Khulna’s poor people, understand the practices they are developing, and examine the role that institutions are playing in supporting/constraining these practices. Khulna is third largest city of Bangladesh, located in the southwest region, where the consequences of climate change are expected to be particularly severe. In order to capture the main features of Khulna’s diverse low-income settlements, we examined two of the most common forms of settlement – a public (Rupsha Ghat) and a private (Bagmara) settlement. A quantitative mini-survey was followed by detailed qualitative interviews and participatory exercises. In many ways Khulna’s poor are responding well to their problems, such as through adjusting their livelihoods and reducing risks through individual and collective actions, and built environment changes and adaptation. People have more opportunities for advancement in public than private settlements, in terms of both developing more effective practices and having comparatively fewer constraints. However, several factors are constraining what they can achieve, such as geography and settings, lack of socio-political platform, ineffective support from public institutions, aid and NGO dependency, and limits to their own agency and structures. The paper concludes by arguing that improving the formal and informal processes of urban governance is central to strengthening the capacity of people in low-income settlements to cope with both existing problems and the intensified problems created by climate change.