In the context of global climate change, the European Union's construction sector accounts for approximately 40% of final energy consumption, highlighting the urgent need for measures to reduce its carbon footprint. Among various energy efficiency strategies, the thermal rehabilitation of existing buildings is crucial, as older structures often exhibit poor thermal performance and high energy demands. However, external insulation is not always feasible due to architectural, structural, or heritage constraints, making internal insulation a viable alternative. This study examines the hygrothermal behaviour of internally insulated external walls to assess their effectiveness in improving thermal performance while maintaining indoor comfort. A representative wall from an old building was monitored using Hukseflux Thermal Sensors, measuring thermal resistance in both insulated and uninsulated scenarios. The experimental results were compared with theoretical values to evaluate the model’s accuracy and the real-world impact of insulation. Additionally, the study investigates the transient heat and moisture transport at the interface between the insulation and the existing substrate wall using LogTag humidity and temperature recorders, while WUFI® Pro simulations were conducted for four different insulation systems to assess their comparative performance. Findings confirm that internal insulation enhances energy efficiency but emphasize the need for careful moisture control to prevent interstitial water accumulation and ensure long-term durability. Material selection, installation techniques, and thorough hygrothermal assessment are critical for optimal performance. Internal insulation remains a promising solution where external insulation is not viable.