With the global need to improve building energy efficiency, numerous old dwellings representing a large part of the building stock need to be retrofitted. In the centre of the city of Cahors, France, old dwellings are considered as historical heritage and have to be internally retrofit to preserve the architecture value of the exterior façade. Such retrofits can lead to damage due to, for example, before the retrofit, a careful hygrothermal study must be run to predict the moisture behaviour of construction assemblies. However, most models assume a stand-alone building without taking into account surrounding buildings, whereas in reality buildings will be influenced by their neighbouring environment. In our case study, historical buildings are located in a very dense urban environment, as typical medieval pattern where urban morphology cannot be neglected. In this study, the urban environment modification of the exterior boundary conditions (mainly solar radiation and convective heat transfer coefficient) and consequent hygrothermal performance of the wall was investigated. The model is implemented by coupling the hygrothermal model Delphin to the whole-building simulation model EnergyPlus and Geographic Information Systems (GIS) tool ArcGIS. The goal is to predict exterior boundary conditions in the real geometry of the dense urban area as well as hygrothermal transfer in building envelopes. An open insulation system based on bio-sourced materials is studied. The simulation results indicate a quantitative correlation between urban morphology features and the hygrothermal performance of the fabric and the impact of the insulation system on the fabric decay.