Urban areas are increasingly impacted by the urban heat island effect, especially during heat waves. In the context of improving energy efficiency in buildings, passive and energy-efficient cooling methods are needed for reducing indoor heat stress and lowering building energy consumption during heat waves. In this study, a whole building simulation model that includes both moisture and heat transport in wall envelopes and indoor environment is developed. An analytical solution and two test cases are used to validate the developed model. The developed model is applied to study indoor thermal conditions in urban areas in Zurich, Switzerland in a hot summer. The results show that indoor temperature could not be accurately simulated when moisture transport in the wall envelopes is neglected. Due to the urban heat island effect, night ventilation is not sufficient to cool down the indoor environment during the heat wave in the urban area. The potential of precooling before the heat wave and moisture-desorption cooling from hygroscopic materials have been studied to reduce indoor heat stress in the urban area. The average operative temperature during the heat wave can be reduced by 0.43 °C by precooling before the start of the heat wave, whereas desorption cooling from hygroscopic materials could reduce the average operative temperature during heat waves by 1.31 °C. A combination of these two mitigation measures could lead to enhanced passive cooling effect. There is a large potential of using desorption of hygroscopic material to reduce heat stress during heatwaves, while minimizing energy consumption of buildings.