This study aimed to appraise the role of local institutions in adaptation to changing climate at the local level in the Bilate Basin Agropastoral Livelihood Zone of Ethiopia. Thirty-one years of climate data were analyzed by employing the Mann–Kendall trend and Sen’s slope test techniques. The survey was conducted on 400 households that were systematically randomized from 7066 households, while community-level data were collected through the participatory rural appraisal (PRA) technique. The entire analysis was framed by a tetragonal model. The results of the analysis indicated that temperature exhibited a significantly increasing trend, while rainfall, which is statistically related to temperature, showed a decreasing trend, resulting in lingering droughts and human and animal diseases. Major livestock declined by 69%. As a response, while Sidama indigenous institutions were well-functioning and nurtured through local knowledge, and the governmental and civic ones were entrenched with various limitations. Contextual fitness and compatibility, interplay, inclusiveness, and sustainability of their operations in temporal and spatial scales were some of their limitations. Therefore, federal and local governments should focus on monitoring, evaluating, and learning aspects of their grand strategies, review general education, farmers’ credit, and civic institutions’ governance policies and strengthen the synergy of civic, government, and indigenous institutions.