A novel functionalized graphene oxide grafted by ammonium polyphosphate (GO-APP) was synthesized through acylating chlorination method to improve the flame retardancy and mechanical properties of polypropylene (PP) nanocomposites in combination with pentaerythritol (PER). During the mixing process, GO-APP nanosheets were thermally reduced and PP/rGO-APP/PER composites were finally obtained. In comparison, PP/rGO-APP/PER composites exhibit better mechanical, thermal, and flame-retardant performances than those of PP/APP/PER composites when containing the same loading of total additives. PP/APP/PER 30 wt % composite only passes V-1 rating in vertical burning tests (UL-94), whereas PP/rGO-APP/PER 25 wt % composite ranks V-0 rating. Furthermore, PP/rGO-APP/PER 30 wt % composite reaches the highest limiting oxygen index (LOI) value of 31.2%, and its impact strength is almost three times higher than pure PP. The improvement in the fire safety is mainly due to the enhanced char yield, and the "tortuous path" effect caused by intercalate-exfoliated structures formed in PP/rGO-APP/PER composites.