Climate change poses profound risks to the livelihoods of vulnerable rural mountainous communities due to their higher dependence on natural resources which causing higher degradation. The current study had assessed the vulnerability due to climate change and livelihood practices of the Tehsil Balakot of Khyber Phuktoon Khawa (KPK), Pakistan and how these practices help to elate their adaptive capacity. Moreover, vulnerability of mountain forest in provision of forest services and land use changes were also determined.Based on mixed method approach including ten focus group discussions, survey of two hundred households and in-depth interviews with the locals; different hazards and their associated livelihood effects were explored. Wellbeing status of the community and resulting adaptation strategies were also analyzed. Temperature and rainfall data of last 30 years (1988 to 2017) was collected from the Pakistan Meteorological Department to validate people‟s perception of climate. Later the mapping of three integral ecosystem services as provisionary, regulatory, and cultural (recreation) through the local community‟s perception had been done. Carbon stock assessment as a climate regulatory service of the forest was carried out from the trees and the soil of Tehsil Balakot whereas livelihood vulnerability was evaluated through a composite indicator as Livelihood Vulnerability Index (LVI) and Livelihood Vulnerability Index of Intergovernmental Panel on Climate Change. Lastly land use change was analyzed using geographical information system (GIS). It was clearly depicted that the changing climate has significantly influenced the livelihoods of the local community through resource degradation, insufficient basic services, low agricultural productivity and social inequity. The poor people were facing additional burden due to their low adaptive capacity towards climate change. Furthermore, the analysis has shown that these forests provide myriad of services to their surrounding communities in form of the timber, fuelwood, climate regulation and recreation. The total carbon stock assessment for the Tehsil Balakot was determined as 243.79 t/ha. The average tree biomass as 207.41 t/ha and soil carbon was found as 36.38 t/ha. In the climatic trends, there was an overall decrease in mean minimum annual temperature by a factor of 0.0024 for each year whereas there had been an overall increase in mean maximum annual temperature by a factor of 0.0412 for each year. The mean annual rainfall of thirty years was 1471.27 mm. The comparative analysis within Tehsil Balakot showed that Union Council Balakot was more vulnerable with a LVI score of 0.41 than Kawai with an aggregate score of 0.35. The results of in-depth analysis of differential vulnerability showed that households in Balakot had the low adaptive capacity and higher exposure to natural disasters. The study has concluded that these forests are playing a vital role for the livelihood of the surrounding community as well contributes in climate change impacts mitigation. After working with communities, it is suggested that government policy should focus on those emergent issues which were identified relevant by communities and are most critical for their livelihoods. Developmental and community planners should also use such studies to assess the root causes of vulnerability to specify indigenous needs in policy making.