This article explores the increasing impacts of recurrent droughts on dryland smallholders, caus-ing extensive damage to agriculture that impedes sustainable livelihoods and adaptation path-ways. This paper presents findings from research focusing upon five asset categories of livelihood approach, namely economic, social, natural, physical, and human capital, that are repeatedly ex-acerbated by the dynamics of repeated droughts. Focus group discussions were performed in four villages of Gorinabari union, Panchagarh district, northwest Bangladesh. This study explores the severe effects of drought on agronomic and livestock production, causing huge economic losses and unanticipated uncertainty to smallholders' livelihood activities. The findings infer several challenges that remain for undermining adaptive capacity associated with scarce modern tech-niques and knowledge, lacking agro-information, inadequate credit, capital inadequacy, agro-nomic damages, economic losses, and persistent drought episodes. The findings also suggest that smallholders' inability to adapt to changing situations causes much suffering during drought events. The results suggest that effective policy implementation, institutional arrangements, drought-resistant yields, poultry farming, livestock rearing, and small trading can expedite the smallholders' adaptive capacity to a given adverse condition in northern Bangladesh.