We report the findings of an assessment of vulnerability to climate change for Sydney, Australia. Sydney, is situated in a broad, coastal river-basin, is geographically separated from supporting natural resources, and can expect long-term trends in population growth to continue placing pressure on infrastructure. Climate projections indicate that in addition to increases in average temperature, Sydney can expect higher incidence of extreme climate events such as heat waves, bush fires (particularly on the city’s urban fringe), intense low pressure weather systems (known as East Coast lows) leading to riverine flooding, and coastal inundation from sea level rise. In this context, our assessment focused on the vulnerability of and capacity to adapt government service delivery in the Sydney region. We employed a participatory integrated assessment process with public sector employees representing five key sectors to assess vulnerabilities in government service provision that will be amplified by future changes to climate. These were identified as: lack of perception of climate risk, inadequate skills and knowledge to understand climate impacts, pressure from population growth on human settlements, insufficient consideration of climate change in strategic planning, pressure on natural resource supply and security, and an inability to direct government funding to adaptation action stemming from current political ideologies. We present the constraints to action on climate adaptation by government as a series of causal loops leading to thresholds of change along an adaptation pathway, which culminate in societal transformation.