Small island developing states (SIDS) have been identified as particularly vulnerable to natural disasters and climate change. However, although SIDS have similar geographical features, natural hazards produce different outcomes in different states, indicating variation in vulnerability. The objective of this article is to explore the sources of this variation. With the point of departure in theories about how political institutions affect adaptive capacities, this article sets out to investigate whether government effectiveness has an impact on the vulnerability of SIDS. While claims over the importance of institutions are common in the literature, there is a lack of empirical accounts testing the validity of such claims. This shortcoming is addressed by this study’s time-series cross-sectional analysis using data from the International Disaster Risk database and the Quality of Government data set. The results show that government effectiveness has strong and significant effects on the number of people killed and affected by natural disasters.