Climate change increases the risks of heat stress, especially in urban areas where urban heat islands can develop. This literature review aims to describe how severe heat can occur and be identified in urban indoor environments, and what actions can be taken on the local scale. There is a connection between the outdoor and the indoor climate in buildings without air conditioning, but the pathways leading to the development of severe heat levels indoors are complex. These depend, for example, on the type of building, window placement, the residential area’s thermal outdoor conditions, and the residents’ influence and behavior. This review shows that only few studies have focused on the thermal environment indoors during heat waves, despite the fact that people commonly spend most of their time indoors and are likely to experience increased heat stress indoors in the future. Among reviewed studies, it was found that the indoor temperature can reach levels 50% higher in °C than the outdoor temperature, which highlights the importance of assessment and remediation of heat indoors. Further, most Heat-Health Warning Systems (HHWS) are based on the outdoor climate only, which can lead to a misleading interpretation of the health effects and associated solutions. In order to identify severe heat, six factors need to be taken into account, including air temperature, heat radiation, humidity, and air movement as well as the physical activity and the clothes worn by the individual. Heat stress can be identified using a heat index that includes these six factors. This paper presents some examples of practical and easy to use heat indices that are relevant for indoor environments as well as models that can be applied in indoor environments at the city level. However, existing indexes are developed for healthy workers and do not account for vulnerable groups, different uses, and daily variations. As a result, this paper highlights the need for the development of a heat index or the adjustment of current thresholds to apply specifically to indoor environments, its different uses, and vulnerable groups. There are several actions that can be taken to reduce heat indoors and thus improve the health and well-being of the population in urban areas. Examples of effective measures to reduce heat stress indoors include the use of shading devices such as blinds and vegetation as well as personal cooling techniques such as the use of fans and cooling vests. Additionally, the integration of innovative Phase Change Materials (PCM) into facades, roofs, floors, and windows can be a promising alternative once no negative health and environmental effects of PCM can be ensured.