The invention comprises an insulated structural block for masonry construction formed to accept rigid insulating foam insert panels and shaped to minimize the transfer of heat by conduction through the block webs from the exterior to the interior of a structure. The foam inserts are preferably located adjacent the exterior face of the block. This permits the portion of the block on the interior side of the foam inserts to act as a thermal mass for passive solar heating and cooling applications. The blocks may be formed in a conventional block making machine by utilizing a modified mold or in a modified block making machine.The block making mold is configured to hold at least one foam insert in place as the block material is poured into the mold. The foam insert forms slots in the block webs to reduce the conduction of heat through the webs. Additional slots are formed by the mold to reduce conduction of heat through the webs and to permit the insertion of a second layer of foam insulation in the block.Alternatively, the block making mold may be configured to form the block with all the recesses and slots necessary for the foam inserts, the foam inserts all being inserted after the blocks are cured or fired depending on the block material.