Historic buildings require groundbreaking retrofit technology to prevent damage to the exterior appearance of the exterior. This paper presents a retrofit technology to increase the energy efficiency of old historic buildings that were heavily exposed to hygrothermal conditions. The study employed an innovative interior finishing material composed of diatomaceous earth and microencapsulated phase change materials to achieve a trade-off between performance improvement and heritage conservation. Based on previous studies, an optimal formulation was identified through evaluation. The developed retrofit technology displays crack resistance, high latent heat capacity, and remarkable moisture stability. Our analysis revealed that the application of this retrofit solution would effectively reduce moisture levels and mitigate condensation risks without compromising the building’s historical integrity. The retrofit technology yielded a reduction in cooling and heating energy consumption by over 10% while concurrently addressing moisture stability through a decrease in the thermal transmittance of the exterior walls. By utilizing passive technologies and the unique properties of diatomaceous earth, our pioneering research on the sustainable preservation of historic buildings has laid the foundation for widespread retrofit adoption in heritage conservation.