Hey guys, I want to finish my basement with drywall but I have a bit of a problem. My basement gets very humid during summertime. The walls begin to peel as well. How can I go about hanging drywall and insulation and not worry about mold or mildew? If anyone can give me any ideas I would greatly appreciate it. Well thanks guys.

In a word, NO. You must solve the moisture problem first. I assume that by "walls begin to peel" you mean paint peels.

The question is why that occurs? Is it humidity or is it water penetrating the walls? Most likely it is water coming through the walls. That means water proofing or water abatement. Most likely you will have to cut out the floor around the perimeter of the basement, install drainage pipe and a sump pump.

I'am with hkstround on this. Don't build in already poor conditions. If you solve the problem, this is one of the best way to finish off a basement

YouTube - Install Rigid Foam Insulation in Basement Video

YouTube - Best way to insulate a basement 800x600