The mechanism of discoloration (‘scorch’) of water-blown flame-retardant polyurethane (PU) foams has been studied. As UV spectroscopy showed, scorch is a kinetically controlled phenomenon, and it can occur either in flame-retardant or non-flame-retardant foams. Isolated isocyanate groups in the PU structure, which transform into aromatic amines, are mostly responsible for scorch. Some flame retardants tend to accelerate scorch, and it becomes visible during industrial foaming, especially in hot and humid weather conditions. UV, FTIR, 13C and 31P NMR and GC-MS study carried out with a model aromatic amine showed that aliphatic phosphate esters as well as aliphatic chloroalkyl phosphates tend to N-alkylate aromatic amines. N-alkylated aromatic amines are easier to oxidize to colored quinoid type chromophores compared to primary aromatic amines. Discoloration can be significantly decreased by using aromatic flame retardants or by applying proper antioxidants in combination with aliphatic flame retardants.