Turkey has dynamic economic development and rapid population growth. It also has macro-economic and especially, monetary instability. The net effect of these factors is that Turkey's energy demand has grown rapidly almost every year and is expected to continue growing. Since 1990, energy consumption has increased at an annual average rate of 4.3%. The energy consumption is distributed among four main sectors which are industrial, building (residential), transportation and agriculture. Approximately 33% of total energy consumption in Turkey is used by residential sector. This situation makes it more important to insulate buildings in our country where fuel prices are too high. Turkey is divided into four climatic zones depending on average temperature degree days of heating. In this study, the four different cities of Turkey, Izmir, Istanbul, Ankara and Erzurum are selected to determine the optimum insulation thickness of the external wall of buildings. Optimum insulation thickness for six different energy sources (Soma coal, natural gas, coal, LPG, fuel-oil, diesel fuel) and two different insulants (extruded polystyrene, rock wool) is calculated and compared to each other. In addition, by using life cycle cost analysis method. Pay back period is calculated for each zone. Copyright © 2010 by ASME.