Despite being extensively implemented in research, it remains challenging but highly desirable to develop ammonium polyphosphate (APP)-based polyurethane (PU) combining excellent flame retardancy and improved mechanical properties. Herein, hydroxyl-decorated APP (OH-APP) was successfully fabricated through a facile, green, yet efficient cation exchange reaction with N-methylethanolamine, and utilized as a multifunctional reinforcing agent for solvent-free two-component PU in the curing process. Results demonstrate that the conjugation of OH-APP imparts to the resultant cured PU samples (PU/OH-APP) enhanced fire safety and smoke suppression performance, as evidenced by the considerable decrease in peak heat release rate, total heat release, peak smoke production rate and total smoke production by 75.4, 30.1, 64.3 and 14.4% over those of pure PU. Furthermore, the tensile strength of PU/OH-APP is improved by 66.5%, while the ductility is well maintained, highlighting its promising potential in industrial applications. This work is aimed at opening a new avenue for the development of APP-based PU with outstanding performances through covalent anchoring approaches.