This study briefly encompasses the current initiatives and alternative market mechanisms such as clean development mechanism, fiscal and financial incentives, regulatory requirements and insurance provision to address climate change actions in Malaysia. The government has taken many initiatives including promoting utilisation of renewable energy, energy efficiency in industry, building and transport sector, restructuring public transport system, cleaner fuel, stringent emission standards and alternative industrial processes technique. There is also a substantial Clean Development Mechanism (CDM) potential in Malaysia of up to 100 million tonnes CO2 equivalent for the period 2006 to 2012. At market prices between US$ 3 and 10 per tonne, this corresponds to a total capital inflow to Malaysia from sales of CDM credits (CERs) in the range of RM 1.14 to 3.8 billion. Bilateral and multilateral CDM projects might typically leverage project financing 3 to 4 times this amount, hence contributing substantially to foreign direct investment and technology transfer. Although, the Malaysian government has given much efforts to managing climate change issues, there is still need for improvement includes: integration of programmes in various agencies, adjustment of current sectoral-based approaches, stakeholders consultation and cooperative actions and expansion of the use of market based instruments as well as carbon taxation and a cap-and-trade programmme augmented by regulatory systems. In addition, there is urgent need to address research and development (R and D) for both adaptation and mitigation. This balancing is required to avoid compromise in economic growth and sustainable development of this country.