The theoretical importance of understanding how livelihoods shape local vulnerability to the effects of climate change has received broad attention, but with relatively few attempts to produce and implement an analytical framework based on the theory. This study develops a livelihood vulnerability analytical framework, and applies it to the case of rural indigenous communities of Taiwan that are regularly exposed to typhoons and associated geological hazards. Measures of the factors influencing how typhoons impact these indigenous communities (sensitivities), and of the abilities of such communities to respond in anticipatory or reactive modes (adaptive capacities) are also included. The study is based on mixed qualitative and quantitative analysis, combining data from in‐person interviews and surveys from 2006 to 2009. Livelihood vulnerability narratives are developed accordingly, together with a spatially‐explicit livelihood vulnerability index to diagnose the dimensionality and the distribution of vulnerability across the area. Three patterns of livelihood vulnerability are found including least vulnerable communities in the remotest area with relatively abundant livelihood capitals to mitigate vulnerability, intermediate vulnerability communities which are doubly exposed to market and typhoon‐associated stresses, and the most vulnerable communities trapped in poverty and vulnerability loops. The patterns reveal strong spatial relationships of social development beginning with the Japanese colonial government (1895–1945) and continuing through the Kuomintang Chinese government (1945–present). This historical development shaped the original human‐environmental conditions in each community and the inequality continues to expand due to increased hazard risk and inappropriate policy interventions. This study highlights the need for future research to develop a continuous program for longitudinally tracking the dynamism of the three patterns of vulnerability.