A pressing need exists to produce masonry blocks that are more sustainable and energy efficient since the concrete industry is responsible for more than 5% of the worldwide carbon dioxide emissions. Producing masonry blocks that have a higher thermal insulation capacity can reduce energy consumption. In this study, an experimental investigation was conducted to explore the energy efficiency and thermal characterization of a new alternative masonry unit that were manufactured using waste (wood fiber) and by-product (fly ash) materials. Two different tests were performed, according to both ASTM standards C1363-11 and D5334-14, to determine the thermal conductivity factor, energy saving, and thermal insulation for the entire masonry unit and the new alternative material itself. A guarded hot box was fabricated to simulate a real insulation case. The results indicated that producing masonry units using fly ash and wood fiber instead of the conventional materials clearly influenced the energy consumption. Specimens produced out of fly ash and wood fiber reduced the energy consumption by 64% compared to a conventional masonry unit. A modified thermal needle probe procedure was used to find the thermal conductivity of the fly ash-wood fiber as a material, not a unit. The new material exhibited a clear reduction in thermal conductivity compared to many commonly used standard construction materials. The mechanical characterization and dimension requirements were reported to show that the new ecofriendly masonry units met the ASTM requirements for non-load-bearing concrete masonry units.