The global impact of climate change has led to unprecedented environmental challenges, resulting in the displacement of vulnerable communities around the world. Rising sea levels, extreme weather events, and prolonged droughts compelled populations to migrate, necessitating well-planned and sustainable relocation efforts. This study focused on the potential pitfalls of poorly executed relocations, emphasizing the need for comprehensive policies that prioritized the needs and aspirations of affected communities. To address this issue, the research examined existing policies and past relocation efforts, aiming to identify policy gaps and propose guidelines for sustainable relocation. The study employed a constructivist approach based on grounded theory, utilizing both secondary and primary data. Secondary data was derived from international and national guidelines regulating involuntary relocation and resettlement, while primary data was collected from four relocation cases in Sri Lanka. Authors propose a series of recommendations to ensure the active participation of affected and vulnerable communities in the formulation of policies, placing a greater emphasis on livelihood restoration and economic empowerment, ensuring the effective implementation of policies, and treating climate-induced relocation and resettlement as a long-term process.