Despite being a critical aspect in improving the building stock’s environmental performance and achieving the global environmental goals, the retrofit of traditional historic buildings is hindered by a lack of comprehensive guidelines tailored to their complex building physics and heritage preservation requirements. The conventional retrofit approach – relying on the combined airtightness and insulation improvements – fail to address two decisive aspects of traditional historic buildings: First, the air leakage is a core contributor to their bioclimatic systems and building physics balance, making its sealing detrimental to their construction durability and their Indoor Environment Quality (IEQ). Second, their heritage protection requirements restrict the conventional retrofit interventions, and particularly hinder the implementation of the mechanical systems needed to mitigate their associated risks on the building and its occupants. Accordingly, there arose an interest in challenging the conventional depiction of the air leakage as an overhead to be eliminated, and in developing a retrofit approach that preserves breathable buildings’ inherent operations by exploiting their air leakage into achieving their optimal post-retrofit performance, accounting for both energy-efficiency and IEQ. A potential solution to the feasibility of such strategy considered a natural phenomenon characteristic of the diffuse leakage through breathable envelopes – the infiltration heat recovery (IHR) – that is conventionally neglected in building performance assessments. The intentional and efficient exploitation of this effect results in construction elements, referred to as Dynamic Insulations (DI), in which air leakage could act as a heat exchanger, diffuse ventilation source, airborne contaminant filter, and diffusion barrier. Although their original design and operations were not tailored to efficiently harvest the IHR effect, the existing breathable constructions reveal similarities with DI systems. This suggests the potential of retrofitting them to act as an efficient DI system, thus exploiting the air leakage into the building performance improvements. The present research aimed at identifying the envelope and ventilation retrofit variants that would optimize the IHR utilization through the construction, as to provide for performance improvements comparable to (or better than) the conventional approach while preserving the breathability of the construction and minimizing the heritage disruptions. The study proposes a comprehensive framework for the assessment of the building’s post-retrofit performance, in terms of its energy-efficiency and IEQ, and investigates the relevant retrofit variants to make performance-based decisions in the retrofit design for traditional breathable buildings. This performance was evaluated using a comprehensive building performance simulation (BPS) model. For a reliable representation of the complex building physics and air leakage dynamics of breathable constructions, the BPS integrates three sub-models: the building energy simulation (BES) model, the air leakage model, and the dynamic insulation (DI) model. Due to a lack of BES tools simulating dynamic construction properties, the well-established analytical Taylor model was adopted and adapted to the dynamic simulation tool. The analysis was implemented in EnergyPlus, for its integral Airflow Network (AFN) and advanced Energy Management System (EMS) capabilities. The model’s validation process revealed significant limitations and highlighted a need for BPS tools capable of more efficiently incorporating the dynamic behavior of building materials and their interaction with dynamic flows, particularly when seeking the tailored, efficient and non-intrusive retrofit of historic traditional buildings...