Currently, the flame retardancy of epoxy resin (EP) was achieved at the expenses of the transparency and/or toughness. In the present work, a phosphorus/nitrogen‐containing compound (FDNP) was synthesized by one‐pot method using 9,10‐dihydro‐9‐oxa‐10‐phospha‐phenanthrene‐10‐oxide, furfural and N‐phenyl‐p‐phenylenediamine as raw materials, and further adopted as a functional agent for epoxy resin. The results demonstrated that the FDNP remarkably improved the fire safety of EP. The incorporation of 4 wt% FDNP enabled EP to pass UL‐94 V‐0 rating test and achieve a limiting oxygen index value of 35.5%; meanwhile, the peak heat release rate, total heat release rate and total smoke release were significantly reduced by 41.3%, 41.6% and 72.5% as compared with the pure EP, respectively. What is more, the EP/4 wt% FDNP composite kept almost the same transparency of the pure EP, simultaneously its impact strength was more than doubled as that of the pure EP. Herein, the improved flame retardancy is contributed to a synergistic biphasic flame retardant effect including the formation of a compact protective carbon layer and the release of both non‐combustible gases and phosphorus‐containing radicals.