In this study, the effects of air gap on the optimum insulation thickness, insulation, and total costs, energy saving, payback period, fuel consumption, and emissions of CO 2 and SO 2 in the composite wall construction have been investigated for a prototype building in a sample city, Karabuk. For this reason two wall constructions, one with and the other without air gap, have been considered and the air gap thickness has been taken from 0 to 6 cm. Based on LCC analysis, optimum insulation thickness is determined for different air gap thicknesses. The results show that when 2, 4, and 6 cm of the air gap thicknesses were used; the optimum insulation thickness, insulation cost, and payback period were decreased by 10.02, 20.03, and 30.07% while the total cost, fuel consumption, and CO 2 and SO 2 emissions were decreased by 27.5, 44.98, and 54.46%, respectively. The insulation material installed at its optimum insulation thickness with air gaps in the composite wall will not only reduce the heat loss from the building walls but also has economical and environmental advantages.