Many masonry buildings were constructed before introducing modern seismic and energy efficiency codes, highlighting the need for sustainable and resilient retrofit solutions. This research investigates the mechanical and hygroscopic properties of fabric-reinforced lime matrix composites, which incorporate basalt fabric into a natural hydraulic lime-based matrix. The study follows a two-stage experimental approach. Firstly, eleven commercially available insulating thermal plasters were selected based on mechanical and thermal criteria specified in current regulations. Their performance was evaluated using dynamic thermal simulations and mechanical tests. In the second phase, the structural behaviour of the composite materials was investigated through tensile and single shear tests to evaluate the bond performance to masonry substrates and through diagonal tests on masonry panels. The results contribute to the further development of fabric-reinforced lime matrix composites as an effective solution for structural strengthening and energy retrofitting of historic masonry buildings, thereby promoting sustainability in the built environment.