The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.Vernacular architecture comes from a wealth of knowledge and experience of humans who were able to adjust to the surroundings and adapt to even extreme climate conditions. In fact many old traditional settlements may fail to functionally provide high indoor quality according to the modern building standards. However, these buildings are still seen as a good example of serving the purpose of locals’ social life and their ability to effectively respond to outdoor climate. Therefore, this work recognises the need to develop the courtyard concept to meet the social and environmental requirements of today’s housing conditions taking the advantage of traditional architecture of Ghadames. The work carried out methods of descriptive and simulation analysis to investigate the environmental performance of existing and proposed residential courtyards employing natural ventilation system in terms of thermal comfort conditions. The optimisation process of the courtyard design not only relied on methods of observation but also householders and professionals’ views were considered. Householders and professionals agreed that courtyard houses might be often linked to lower social classes but still serve most of social and climate purposes. The dynamic thermal simulation showed that indoor comfort temperature in a traditional courtyard was found to be at 34˚C. An optimisation design process was conducted to a courtyard building resulted in reducing the indoor comfort temperature to about 28˚C. Further results showed that the new design has improved the daylighting performance at 2.9% of average daylight factor. The work also outlined the applicability of using locally sourced building materials and their capacity to achieve high thermal performance particularly with reference to the use of organic date-palm fibre. It can conclude that the proposed design has integrated the passive climate design strategies to help achieving acceptable indoor comfort conditions and also sustainable features to further enhance locals’ social life