There are many defects in the post finishing flame-retardant modification of polyester–cotton (CT) fabric, leading to shortcomings such as single function and low flame-retardant efficiency, which still need to be solved urgently. Herein, a bio-based flame-retardant and antibacterial coating consisting of phytic acid and DL-arginine was deposited on CT fabrics using layer-by-layer assembly to obtain a flame-retardant and antibacterial CT fabric. Fourier transform infrared spectroscopy confirmed that the assembled coating was successful deposited on the CT fabric. The thermogravimetric analysis revealed that the number of bilayers had no significant effect on the degradation temperature of the coated CT fabric; however, it significantly improved the charring effect of the sample, wherein the char rate of the CT fabric coated with 20 bilayers increased from 0.11 to 8.67 wt% compared with uncoated CT fabric at 700°C. In addition, the limiting oxygen index of the CT fabric coated with 20 bilayers increased to 32.0 ± 0.3%. Furthermore, the vertical results revealed that the CT fabric coated with five bilayers attained the UL-94 V-1 grade. The heat release rate (HRR) and the total heat release (THR) of the coated CT fabric were significantly decreased compared to those of the uncoated CT fabric. In particular, the HRR and THR of the CT fabric coated with five bilayers reduced by 28.97% and 30.49%, respectively. Furthermore, the coated CT fabric exhibited an obvious antibacterial effect on Staphylococcus aureus, and the inhibitory ring increased from 0 to 4.0 mm with an increase in bilayers to 20. This study describes a facile method of flame-retardant and antibacterial modification of CT fabric using biological materials.