The aim of this study was to investigate the flammability of ecologically friendly, 100% natural larch and poplar bark-based panels bonded with clay. The clay acted as a fire retardant, and it improved the fire resistance of the boards by 12–15% for the surface and 27–39% for the edge of the testing specimens. The thermal conductivity was also analyzed. Although the panels had a density ranging from 600 to 900 kg/m3, thermal conductivity for the panel with a density of 600 kg/m3 was excellent, and it was comparable to lightweight insulation panels with much lower densities. Besides that, the advantage of the bark clay boards, as an insulation material, is mostly in an accumulative capacity similar to wood cement boards, and it can significantly improve the climatic stability of indoor spaces that have low ventilation rates. Bark boards with clay, similar to wood cement composites (wood wool cement composites and wood particle cement composites), have low mechanical properties and elasticity. Therefore, there their use is limited to non-structural paneling applications. These ecologically friendly, 100% natural and recyclable composites can be mostly used with respect to their thermal insulation, acoustics and fire resistance properties.