Internal insulation is generally considered a risky solution regarding the risk of moisture-induced damage such as mould growth and wood decay, and this might particularly be problematic for half-timbered buildings due to the extensive use of wooden elements in the walls. These would be particularly exposed in the case of internal insulation. This study investigates the hygrothermal performance and the theoretical risk of mould growth in critical locations in half-timbered walls fitted with internal insulation through 2D-dimensional hygrothermal simulations. Several types of insulation systems were investigated, including diffusion-open and diffusion-tight systems. Moreover, the effect of exterior plaster to reduce rain intrusion was investigated. The results showed potentially critical relative humidity levels at several places inside the half-timbered walls, mainly when using diffusion-tight systems. However, the combination with exterior plaster positively affected the hygrothermal performance. The direction of the wall is important, as wind-driven rain influences the performance more than the possibility of drying out inwards.