Two distinct views are evident in research on how rural communities in developing countries cope with extreme weather events brought by climate change: (i) that the resource-reliant poor are acutely vulnerable and need external assistance to prepare for such events, and (ii) that climate-related shocks can offer windows of opportunity in which latent local adaptive capacities are triggered, leading to systemic improvement. Results from a longitudinal study in a Tawahka community in Honduras before and after Hurricane Mitch (1994-2002) indicate that residents were highly vulnerable to the hurricane--due in part to previous development assistance--and that the poorest households were the hardest hit. Surprisingly, however, the disaster enabled the poor to initiate an institutional change that led to more equitable land distribution, slowed primary forest conversion, and positioned the community well to cope with comparable flooding occurring 10 y later. The study provides compelling evidence that communities can seize on the window of opportunity created by climate-induced shocks to generate sustained social-ecological improvement, and suggests that future interventions should foster local capacities for endogenous institutional change to enhance community resilience to climate shocks.