Within the last five years energy efficiency measures, including additional thermal insulation of the building façade as well as replacement of old wooden frame windows for polyvinyl chloride ones, were implemented in majority of Latvian daycare centers. However, these actions alone possess great risk of indoor air quality problems, since buildings became more airtight leading to insufficient air exchange indoors. Since Latvian children under the age of 7 can spend up to 60 hours per week in daycare centers it is very important to establish a healthy and comfortable daycare environment that children will find pleasant and stimulating to stay in. Therefore the main aim of this thesis is to evaluate the effect of façade insulation on indoor air quality in Latvian daycare centers. The study’s three major tasks include: 1. Indoor air quality assessment in selected six daycare centers (old, renovated and new-built), using carbon dioxide, air temperature and relative humidity as indicators. 2. Comparison of building façade insulation methods. 3. Estimation of correlation between indoor air parameters and heating energy demand, in moderate climate zone of Latvia. Measurements of carbon dioxide, air temperature and relative humidity were carried out during the period of one week in October 2010, and data regarding daycare center characteristics and maintenance activities was collected via combination of field visits, record analysis and interviews. The field study showed that different types of building construction as well as ventilation strategies employed by daycare centers can cause significant variations in atmospheric and thermal environment. It was found that carbon dioxide concentrations exceeded 1000 ppm in 75% of daycare centers studied, with the highest (1356 ppm) measured in a renovated facility with the natural ventilation system. Thus installation of more efficient ventilation system (mechanical) is recommended to provide acceptable indoor air quality, since opening of windows itself cannot provide the optimal conditions indoors. In all facilities the temperature was kept above 20°C and the average relative humidity was 40 ± 5%, creating comfortable thermal environment for children. Thesis project also includes use of building simulation tool BSim to create model of typical daycare center space, and consequently further examine the effect of different energy efficiency improvement measures on indoor air quality and comfort. The results of this thesis could be further applied for future renovation projects of daycare centers, as well as schools etc.