The architecture, engineering, and construction industry continues to require increasing thermal efficiency in wall assemblies, as reflected in evolving energy code requirements. Many new exterior wall designs include a split insulation system to meet the demand for greater thermal efficiency. As a result, the arrangement of insulation in walls relative to the air, water, and vapor barriers is also changing. The need for, and proper location of, a vapor retarder in exterior walls with split insulation is often not intuitive and requires further analysis. This presentation will discuss relevant code requirements for insulation, discuss water vapor diffusion and methods for evaluating condensation potential, and present best-practices for the selection and location of a vapor retarder. We will also discuss construction considerations designers must negotiate to achieve acceptable thermal and hyrgothermal performance in contemporary exterior walls.