The present study is part of a wider research program, which aims at the development of an innovative masonry construction system that integrates both environmental passive strategies and high energy efficiency. The paper focuses on the parametric computational investigation of the proposed system's basic modular construction component. The thermal performance achieved by alternative geometries of the masonry unit, as well as the use of different constituent materials and insulation fillings, are further examined. The optimum solutions, in terms of thermal performance, were achieved by performing a series of numerical heat flux analyses on alternative proposals, arising from the combination of the above features. Furthermore, the environmental impact, associated with the construction system, is assessed by estimating the total embodied energy of the modular component. It is concluded that the proposed system's thermal performance relies primarily on the characteristics of the constituent mixture composing the modular masonry unit, the geometry of the unit and the use of insulation. In terms of environmental impact, both the constituent mixture used, and the type of insulation material installed, have a considerable impact on the end-product's total embodied energy.