Energy-efficient retrofitting of buildings is an important topic for the future world. Adding thermal insulation to the building envelope is the most common and well-known measure, but existing strategies for energy-efficient retrofits do not consider the life-cycle energy consumption and carbon dioxide (CO2) emissions of the insulation materials. This paper introduces a new approach for selecting the optimum insulation material and thickness based on life-cycle energy consumption and carbon dioxide emissions. The approach was applied to a multi-storey residential building located in I. zmir, Turkey, which has a Mediterranean climate, and the results are compared with the same building in Erzurum, Turkey, which has a cold climate. The comparison reveals the effect of thermal insulation on energy consumption and carbon dioxide emissions. The results show that increasing thermal insulation thickness provides less energy efficiency in the Mediterranean climate than in the cold climate. In addition, if the thickness is not optimised according to the insulation material, the life-cycle carbon dioxide emissions and energy consumption may increase contrary to expectations. Extruded polystyrene insulation with 3 cm thickness for the Mediterranean climate and rock wool insulation with 9 cm thickness in cold climate have the optimum life-cycle energy and carbon dioxide emission performance for the case-study building.