The European building sector is currently responsible for 36% of greenhouse gas emissions. A comprehensive transformation of the sector is essential to achieve the ambitious goal of carbon neutrality by 2050, as outlined in the European Green Deal. Today bio-based materials have the potential to play a crucial role in decarbonizing the construction industry. This study investigates the energy, hygrothermal performance, and sustainability of four bio-based insulation systems (thermal plaster, mineral-based, wood fiber, and hemp-based) applied to the critical case of the underground floor of a historic building in Meltina (Italy), within the framework of the ongoing EU ITA-AUT “SUSMAT” (Sustainable Materials) research project. This project aims to support local enterprises in developing and spreading sustainable, energy-efficient retrofitting solutions specifically tailored for historic buildings. Using a comprehensive methodology, previously developed by the authors, energy and hygrothermal simulations were conducted to assess their performance under realistic conditions. Finally, a life cycle assessment (LCA) was performed to quantify the environmental sustainability of each system. The performance and environmental impact of these bio-based materials were compared to conventional alternatives. The results demonstrate that bio-based materials provide comparable advantages in energy efficiency and hygrothermal risk management, while maintaining compatibility with the historic structure and significantly reducing environmental impact. Furthermore, the methodology facilitated the identification of the design solution with the lowest environmental impact through a comprehensive evaluation.