Developing countries are far more vulnerable to climate change impacts than industrialised countries. Most of the world’s poor live in South Asia where they have limited livelihood options that have become even narrower in recent years, indicating a need for alternative income-generating options. Mud crabs (Scylla spp.) are considered to have promising prospects in different parts of the world including Bangladesh, a well-known region for its vulnerability to climate change. At present, this fishery has become a growing venture in coastal Bangladesh, primarily due to the potential of the export market and availability of seed locally. This study included a calculation of the Human Development Index linked to mud crab fishery (HDIMCF) and a strengths, weaknesses, opportunities and threats (SWOT) analysis to clarify the present status of and strategic directions for the mud crab fishery, for the first time. Results revealed an intermediate level of development of mud crab aquaculture, indicating potential alternative livelihood opportunities for vulnerable coastal communities. The SWOT analysis revealed that positive factors, both internal (strengths) and external (opportunities), predominate over negative factors (weaknesses and threats) and that the fishery can be an alternative livelihood option for vulnerable coastal communities. Despite noticeable diversification of the mud crab fishery, dependence on wild seedstock and possible over-exploitation in the wild appear to constrain sustainable development of the fishery. This study’s findings suggest undertaking immediate wild crab stock assessment for determining current status of wild populations. Moreover, modification of the Government of Bangladesh’s existing mud crab policy is needed to better meet growing demand and sustainability of the fishery. Recommendations of this study may be of help in guiding responsible integrated coastal fisheries management and policy.