This study aimed to reduce the holistic environmental impacts of insulation materials proposed for the accommodation of a marine cargo ship, and suggest the optimal option for cleaner ship production, using life cycle assessment. With a commercial bulk carrier as a case ship, three major insulations were assessed, which were wool-based material (mineral wool or glass wool), expanded polystyrene, and polyurethane foam. The analysis was scoped based on ‘from cradle to grave’, while focusing on the following five representative environmental indicators: global warming potential100years, acidification potential, eutrophication potential, ozone depletion potential, and human toxicity potential. The assessment was performed in the platform of the GaBi software. The results showed that polyurethane foam would have the greatest impacts, especially in regard to global warming, eutrophication, and human toxicity. On the other hand, expanded polystyrene and wool-based material showed better environmental performance than polyurethane foam. For example, wool-based insulation was found, in terms of GWP and HTP, to produce 2.1 × 104 kg CO2-eq and 760.1 kg DCB-eq, respectively, and expanded polystyrene had similar results with respect to GWP, AP, and EP as 2.1 × 104 kg CO2-eq, 23.3 kg SO2-eq, and 2.7 kg Phosphate-eq, respectively. In fact, the research findings point out the shortcomings of current design practices in selecting insulation materials for marine vessels, while providing meaningful insights into the importance of the selection of appropriate insulation materials for marine vessels for cleaner shipping. Therefore, it is believed that this paper will make a sound contribution to enhancing future design practice and regulatory frameworks in response to environmental issues in the marine industry.