In this study, thermal, economical and environmental effects in insulated building walls are numerically investigated under dynamic thermal conditions for two different wall structures and two different insulation materials. The investigation is carried out for different wall orientations during the winter period in Kars city which is one of the coldest cities of Turkey. For this purpose, a computer model based on an implicit finite difference procedure, which has been previously validated, is used under steady periodic conditions. Firstly, thermal characteristics such as yearly heating transmission load, yearly averaged time lag and decrement factor are calculated for heating season. The results show that maximum time lag, minimum decrement factor and lowest heating load are obtained in the brick wall with XPS (Extruded polystyrene) while minimum time lag, maximum decrement factor and highest heating load are obtained in the concrete wall with EPS (Expanded polystyrene). Secondly, yearly heating loads obtained under dynamic conditions are used as inputs to an economic model for the determination of the optimum insulation thickness. The optimum insulation thicknesses, energy savings and payback periods are calculated by using life-cycle cost analysis over lifetime of 20 years of the building. For heating season, it is seen that the lowest value of heating load, optimum insulation thickness and energy saving is obtained for the south-facing wall while highest value of them is obtained for the north-facing wall. The results show that for heating season, the most economical orientation is south-facing wall with an optimum insulation thickness of 9.2 cm at brick wall with XPS. Lastly, fuel consumption and emissions of CO2 and SO2 are calculated by taking into consideration wall orientations for different structure and insulation materials. It is seen that as the insulation thickness increases, the yearly heating transmission load and consequently, fuel consumption and emissions decrease. The results show that for 9 cm insulation thickness, this decrement is 85% for all oriented walls. (C) 2013 Elsevier Ltd. All rights reserved.