As a building component with long history, green envelope has received much attention for its thermal and energy benefits in the past decades. However, few studies have taken into account the two-way effect of green envelope on indoor and outdoor environment during thermal performance evaluation. In this paper, a coupled hygrothermal transfer model of green envelope is developed and validated against field measurements, and the results demonstrate that the model could reasonably reproduce temporal variations of temperature and moisture in green envelope. Then the green envelope model is implemented into an urban canopy model to predict its thermal performance under urban canopy context in Shanghai area. The simulations for a district of office buildings indicate that green envelope decreases sensible heat getting into the indoor and outdoor space significantly, and the maximum indoor temperature difference between buildings with and without green envelope is up to 0.34 °C under free-floating condition. Meanwhile, for outdoor environment, the maximum differences for air temperature, mean radiant temperature and SET* are up to 0.1,0.9 and 0.2 °C respectively under air conditioning condition. What’s more, sensitivity analysis shows that building density has a significant effect on the relative cooling benefit of green envelope against common envelope.