This study aims to describe, analyse and quantify the impact of El Niño induced climate variability on the agricultural sector and rural economy of Malaysia, and to propose measures to mitigate impact so as to stabilize agricultural production and the welfare of the rural population at large. Drought-related effects are discussed. Special attention is given to the haze-related impacts on human health, animal production, fishing industries, aviation industry, tourism industry, and agriculture industry during the 1997-98 El Niño.