This article aims to analyse the potential of participatory budgeting as an effective tool for climate mitigation and adaptation in local authorities in Portugal. The study explores how these practices, traditionally aimed at fostering participatory democracy, can be adapted to address climate challenges, contributing to developing a new generation of participatory budgeting processes prioritising environmental and climate-related issues. Through a detailed qualitative analysis of the data collected, the study assessed the current state of participatory budgeting in Portugal and identified its potential and limitations within climate change. The research revealed that municipalities and parishes in Portugal possess the necessary resources and capacities to implement participatory practices that address climate issues effectively. Examples such as Odemira and Lisbon, which have already undertaken environmentally focused initiatives, highlight this capacity. However, it was also found that reforms and adjustments are necessary to ensure that participatory budgets dedicated to climate issues can significantly contribute to addressing environmental challenges and fostering citizen participation. These adjustments should include improvements to the participatory structure, enhanced education and awareness regarding climate issues, and mechanisms to ensure that community suggestions and priorities are effectively integrated into budgetary decisions. Furthermore, it is emphasised that continuous monitoring and evaluation initiatives are fundamental to refining these processes over time. In summary, while there is considerable potential for using participatory budgeting as a tool to address climate change, it is crucial to implement the necessary adjustments to maximise the impact and efficacy of such practices. Consequently, local authorities can more actively engage citizens while promoting sustainable solutions tailored to local climate challenges.