This paper investigates the performance of timber-framed walls insulated with straw bales, and compares them with similar walls containing expanded polystyrene (EPS) instead of straw bales. First, thermal conductivity, initial water content, and density of the straw bales were experimentally measured in a laboratory set-up, and the dependence of the thermal conductivity of the dry material on temperature was described. Then, the two insulation solutions were compared by looking at their steady and periodic thermal transmittance, decrement factor, phase shift, internal areal heat capacity and surface mass. Finally, the acoustic performance of both wall typologies was analyzed by means of in situ measurements in two-story buildings built in Southern Italy. The weighted apparent sound reduction index for the partition wall between two houses and the weighted standardized level difference for the façades were assessed based on ISO Standard 16283. The results indicate that the dry straw bales have an average thermal conductivity of k = 0.0573 W/(m·K), and their density is around 80 kg/m3. In addition, straw bale walls have good steady thermal performance, but they still lack sufficient thermal inertia, as witnessed by the low phase shift and the high periodic thermal transmittance. Finally, according to the on-site measurements, the results underline that the acoustic performance of the straw bale walls is far better than the walls adopting traditional EPS insulation. Overall, the straw bales investigated are a promising natural and sustainable solution for thermal and sound insulation of buildings.