Polystyrene is renowned for its excellent thermal insulation due to its closed-cell structure that traps air and reduces heat conduction. This study aims to develop sustainable, energy-efficient building materials by enhancing the thermal and mechanical properties of plaster–polystyrene bio-composites. By incorporating varying amounts of polystyrene (5% to 25%) into plaster, our research investigates changes in thermal conductivity, thermal resistance, and mechanical properties such as Young’s modulus and maximum stress. Meticulous preparation of composite samples ensures consistency, with thermal and mechanical properties assessed using a thermal chamber and four-point bending and tensile tests. The results show that increasing the polystyrene content significantly improved thermal insulation and stiffness, though maximum stress decreased, indicating a trade-off between insulation and mechanical strength.