The presented study aims to evaluate the effect of thermal mass in heavyweight construction in residential buildings in Palestine on indoor thermal environment using a building performance simulation tool. The most used residential building types, shapes and sizes were used as typical models for indoor environment performance simulation. The paper used a sensitivity analysis for four different scenarios according to the location of thermal insulation in the wall for two climatic zones, when no heating and cooling was used. The building material's thermal properties, infiltration, activities, time schedule, electric lighting and glazing selection were based on onsite studies. The results show that the internal thermal mass of the studied buildings influences their thermal performance and future potential energy demand for heating and cooling. Buildings with insulation positioned on the outside, with high thermal mass and high thermal time constant showed the best thermal performance for different climatic zones, whereas buildings without thermal insulation or with insulation from the inside showed the worst thermal performance. The position of thermal insulation will affect potential energy demand for heating and cooling in the residential buildings.