Considerable uncertainty exists about future climatic predictions but there is little doubt among experts that the future will be warmer. Climate change and the associated elevation in atmospheric CO2 level and temperatures will provide novel challenges and potential opportunities for cultivated plant species. Plant breeding and domestication can contribute to improvements in both yield and quality of native grasses, legumes and forage shrubs. This review explores the use of functional traits to identify native Australian grasses, legumes and forage shrubs suitable for domestication, to meet the challenges and opportunities under a changing climate in pastoral areas in Australia. The potential of these species in terms of life history, regenerative traits, forage quality and quantity, drought tolerance and invasiveness is examined. The paper focuses on three Australian pastoral regions (high-rainfall temperate south, tropical and subtropical grasslands, low-rainfall semi-arid shrublands), in terms of future climate predictions and potential of selected native species to meet these requirements. Selection for adaptation to new climatic environments is challenging but many native species already possess the traits required to cope with the environment under future climate scenarios.