Tom has given you one option. I will give you another option. I have several 100+ yr old houses (happen to be nice rental houses). Early in my experience with older houses, I went Tom's suggested route (completely stripping all lath & plaster, then drywalling). After spending the time, effort, and money doing this considerable "gutting" project (I preserved all moldings and baseboards)---After doing all of this, I showed the house to several propective tenants--- one set of prospective tenants turned down the house---as follows: They were really attracted by the exterior character of the old house---but were disappointed by the lack of character inside---they specfically missed the imperfections of lath & plaster walls (slight bulges, etc)--they specfically pointed to the walls and knew that I have drywalled them!! After that experience, I insulated all of my older houses by having insulation blown-in from the exterior. There are two important considerations when hiring a contractor to blow-in insulation from exterior: FIRST, find out how he proposes to blow-in the insulation. If he proposes drilling 2" to 3" hole through the siding---blowing in the insulation---then capping the holes with plastic caps---PHONE THE POLICE AND HAVE SAID CONTRACTOR ESCORTED FROM YOUR PROPERTY! If, instead, the contractor proposeds to remove select sections of siding---blow-in the insulation---then replace the siding, I would consider dealing with this contractor (I would want to see a house where he has used this method). SECOND, picking the type of insulation to be blow-in is important. If a contractor proposes to blow-in celious (sp?) (grown-up newspaper)--PHONE THE POLICE AND...(you know). I have always used blown-in "Rockwool"-- a bit more expensive than paper, but much superior for a lot of reasons. Well, that's another option. ---It's always good to have options. --Jaes.