Much research on building envelopes and energy efficiency in Bhutan has been done, however the importance of hygrothermal analysis on timber envelopes has received limited attention. Is constructing all residential buildings with timber in the Bhutanese climate feasible? A simulation-based methodology of white box modeling software Design-Builder and WUFI Pro is used to analyze the feasibility of timber construction. Typical Bhutanese buildings are more energy in-efficient due to poor thermal and leaky buildings envelope. The baseline building has an energy demand of 269.5 kWh/m2a in cold climates and 193.0 kWh/m2a in warm and humid climates. The proposed building, with timber frame and cross-laminated timber (CLT), has energy demand of 93.7  kWh/m2a by following prescriptive ASHRAE standards and 85.8 kWh/m2a by using Passivhaus building envelope in cold climates, with energy savings of 51% and 62%, respectively. For warm and humid climates, the proposed building has energy demand of 168.7 kWh/m2a by following prescriptive ASHRAE standard and 151.2 kWh/m2a for Passivhaus standard, saving 11% and 18% energy, respectively. For hygrothermal performance 24 configurations have been studied for WFW and 72 configurations for CLT wall. 88% of the WFW fail in the cold climate except for those configurations which have both vented and vapor barrier. However, warm and humid weather does not give any moisture problem to WFW. The CLT assemblies pass the durability test in all the simulated configurations including XPS,EPS, MW insulation. The conclusion of the research is simulation based, and further experimental validation is required.