Inner courtyards have been traditionally used as passive strategy in vernacular buildings in desert climates. This paper presents a study conducted to investigate indoor and outdoor thermal comfort of two vernacular buildings in the hot arid climate of Upper Egypt and proposes an improved solution for courtyards to achieve sustainable development of current vernacular houses and apply the same in the arid climate zone of Egypt. The thermal comfort of vernacular building spaces was evaluated based on using field measurements during the hot season and improvement for courtyards based on ENVI-met V5.6.1 simulation model using three scenarios. Two vernacular buildings (Hassan Fathy and Nubian house) were selected to represent the traditional buildings south of Egypt. The study found that using adobe bricks with high thermal mass in vernacular buildings maintained lower indoor temperature with a range of 2.7 degrees C to 6.7 degrees C compared to outdoor temperature; this is considered effective thermal insulation. Meanwhile under extreme hot conditions, courtyard temperature inside the vernacular house was 0.3 K higher than the outdoor. This is not sufficient to maintain indoor thermal comfort without integrating passive solutions inside courtyards. In addition, applying the hybrid solution with big dense trees in the courtyards achieved a significant reduction in PET ranging from 4.2 degrees C and 5.7 degrees C; shading the widest area of courtyards and allowing for family activities. The study provided techniques and methodology for the middle courtyard of vernacular buildings, demonstrating how improvement achieves thermal comfort and sustainable development required in the 21st century in Upper Egypt, and can be applied to other vernacular houses in different desert cities in southern Egypt.