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Flood vulnerability is a complex concept involving the interactions between environment, social and economic dimensions. Indicator‐based vulnerability assessment is widely used in vulnerability studies to summarise complexity and multidimensionality issues to gauge the level of vulnerability. A set of 21 environmental and socio‐economic indicators is used to quantitatively assess the three factors of vulnerability, namely exposure, susceptibility and resilience to flood at the subnational level. The construction of the vulnerability index involved the selection of indicators, their normalisation, weightage and aggregation to a final index. In addition to the Flood Vulnerability Index, three sub‐indices namely Exposure Index, Susceptibility Index and Resilience Index were generated. Based on composite indicator approach, the vulnerability of the states in Malaysia was categorised from very low to very high. The source of vulnerability is due not only to the environmental exposure to flood hazard but also contributed by the internal status of the socio‐economic factors within the vulnerable systems.