Recent recordings of urban overheating reveal a dramatic increase in cities’ population exposure to heatwaves. Heatwaves’ implications are escalated in urban environments due to the intensification of the Urban Heat Island (UHI) effect. To combat the overheating and UHI adverse effects, novel urban rehabilitation actions are needed based on reliable predictions of appropriate Key Performance Indicators (KPIs) (such as pedestrian-level air temperature and thermal comfort) for alternative design scenarios. The objective of the current study is to present the application of a previously developed Computational Fluid Dynamics (CFD) model for the calculation of urban microclimatic conditions for the assessment of the UHI and thermal-comfort conditions in a central urban area in the city of Heraklion in Crete, Greece. Empirical validation of the model is performed through comparisons with monitored microclimate data (i.e., air temperature, relative humidity, wind speed) and actual sensation vote recordings found in another research study. In compliance with the latter, the validation campaign is conducted for a typical hot summer day in July 2009 from 10:00 to 16:00. The model is then used to assess the UHI effects for both the existing urban configuration and a given suggested environmental upgrade of the space. Simulations of the existing situation reveal that the squares located in the studied area already stand for efficient resistances to urban overheating, and heat vulnerabilities are detected mainly in non-shaded traffic and pedestrian roads perimetric to the squares. Based on the CFD simulations, the suggested environmental upgrading plan exhibits a reduction in the peak mean air temperature of 0.46 °C, and thermal comfort is improved by at least 5% (based on SET) throughout the studied area in summer. At the same time, simulations of winter conditions suggest that there are limited potential pedestrian thermal-sensation and building heating penalties under the considered renovation scenario.