Abstract In China, more than 100 million people live in earth-based dwellings currently. However, there have been few studies on measures for improving indoor thermal environment and decreasing energy consumption of adobe buildings systematically. So, this paper studied the measures mentioned above. Firstly, parameters such as indoor thermal environment, PMV, thermal properties and thermodynamic disfigurement of building envelope were measured and analyzed on a quadrangle adobe dwelling in Gansu, China. Then, three optimization schemes (transforming layout only, transforming external walls only and changing the two simultaneously) were put forward. Finally, the thermal environment and energy consumption of the optimization schemes were analyzed by numerical simulation, and the cost benefit analysis of them was carried out. Among those schemes, scheme of changing layout and external walls simultaneously leads to the best performance in both the two respects mentioned above, while scheme of transforming layout only gives the worst performance. But, when both taking consideration of economy and energy saving, the preferred plan is scheme of changing layout only, and the worst is scheme of transforming layout and external walls simultaneously. This study has been conducted to give guidance when constructing or reconstructing quadrangle adobe dwelling, which is distinctive and historical in China.