In many cases, protecting permafrost from further thaw due to human activities might be the first choice for embankment design in permafrost regions. Two-dimensional finite-element analysis was conducted, in which phase change was taken into consideration to simulate the thermal regime of the Qinghai-Tibetan Highway with extruded polystyrenes. Based on the predicted maximum thaw depth in the following 50 years, a better position for insulation and the optimum thickness of insulation were presented and a reasonable width of insulation and the right construction season were suggested. The applicable range of insulation in embankment engineering of the Qinghai-Tibetan Highway in terms of mean annual air temperature was also suggested and the influence of geothermal field of permafrost on the applicable range of the insulation was discussed.