Abstract: An insulation strip made of closed cell plastic foam is formed in the center of a building block transverse to the webs thereof and parallel to the side walls. The insulation strip extends beyond the edge of the sidewalls by 1/4 inch on all four side edges of the block so as to provide a 1/2 inch space for mortar joints between blocks when the blocks are stacked to form a wall. In one embodiment, the edges of the insulation strip are grooved in a cross-hatched pattern which tends to make the edges compressible, thereby permitting minor dimensional changes in the size of the mortar joint to keep the blocks aligned.