The objective of the present study was to find out the effect of roof thermal insulation and soft flooring on microclimate of cow shed, physiological response and production performance of crossbred Jersey cows under loose housing system. Twenty crossbred Jersey cows were divided into two groups, ten in each. Two types of housing were compared- (i) Existing shed (T0)- having asbestos roof and concrete floor and (ii) Modified shed (T1)- thatch ceiling under asbestos roof and partial replacement of concrete floor with sand bed. The surface temperatures of the thatch ceiling at covered area and sand bed floor at open area were significantly lower in the modified shed (T1) in both the seasons as compared to existing shed (T0). Physiological indices viz. rectal temperature, pulse rate and respiration rate of crossbred Jersey cows were significantly higher in T0. The daily milk yield of T1 group cows was significantly higher than that of T1. Housing modification by thatch ceiling and soft flooring by sand bed helped improving micro-climate of shed, relieved stress conditions and showed enhanced milk yield in crossbred Jersey cows.