The traditional and indigenous architecture in Saudi Arabia is being replaced by modern, Western-style buildings, resulting from the growing influence of Western culture. This change is evident in architectural elements such as Mashrabiya, which was once a symbol of the country’s Islamic architecture. The research paper aims to analyse the impact of modernization and the resurgence of Mashrabiya on a building’s energy efficiency, as well as the cultural and religious integrity of its historical counterpart in the context of Saudi Arabia. The study employed mixed research methods, including an online survey with Saudi Arabian households to study the public perception of Mashrabiya, case studies of residences with traditional and modern Mashrabiya, and a range of dynamic thermal simulations on a residence with traditional Mashrabiya to study its impact on energy consumption. The survey revealed that the public is aware of the changing face of Mashrabiya and its impact on the cultural and religious identity of the region, mainly privacy, but it is largely uninformed about ways to preserve its true essence. The simulations demonstrated a significant improvement in thermal comfort, i.e., an approximate 14% reduction in operative temperature and a 77.8% reduction in peak solar gain; an improvement in energy efficiency, i.e., a 5.7% reduction in monthly cooling load and a 35.5% improvement in daylight factor. Based on the findings, the research provides several recommendations to preserve the identity of traditional Mashrabiya while enhancing their energy efficiency, such as the incorporation of traditional design elements into the plans of the Saudi Arabian government.