Computing paradigms have evolved towards integrating small and personal computing devices with large-scale and resource-sharing computing infrastructures, such as services and cloud computing (SCC) platforms during the past two decades to provide users anytime, anywhere computing capability with more flexibility, richer computing resources, more cost-effectiveness, lower risks of system failures, and less management and maintenance effort. Situation-aware (SA) applications in SCC environments have the capability to adapt SCC systems to situation changes to facilitate better human-computer interactions and continuous system availability, and satisfactory quality-of-service (QoS) for the applications. Mission-critical applications in many domains usually require situation awareness, and have started to incorporate it in SCC platforms due to the need of rapidly reconfiguring and integrating systems owned and operated by various organizations for sharing information and coordinating operations. In this paper, the concepts and characteristics of SCC and situation awareness (SAW), and the challenges and current state of the art in developing SA applications in SCC environments are discussed. Our research in this area, including the development of Adaptable Situation-aware Secure Service-based (AS3) systems and Adaptive Service-Based Systems (ASBS) with QoS Monitoring and Adaptation (M/A), is presented. Future research in this area is discussed.