This study investigates the energy-saving effects of thermal insulation for existing urban houses in Malaysia through the full-scale experiment. The experiment was conducted in two units of experimental houses located in the city of Johor Bahru, Malaysia from July to September 2017. The effects of external/internal insulation were examined under two different conditions, namely (1) naturally ventilated condition and (2) partial air-conditioning condition (where ACs were used only in master bedrooms), compared with the control unit. The results suggest that under the condition of night ventilation, external wall insulation is preferable for a high thermal mass building, whereas internal insulation prevents the effect of structural cooling during daytime. On the other hand, under the partial AC condition, internal insulation for the master bedroom is apparently a better option than external insulation. The cooling load of the room was reduced by up to 69.6% compared to the control room. It was also found that the modifications for other spaces were not effective in reducing the cooling load of the air-conditioned master bedroom.