The chemical recycling of postconsumer poly-(ethylene terephthalate) (PET) bottles to produce highly thermally stable polyurethane foam (r-PUF) with excellent flame-retardant (FR) performance could be applied on an industrial scale to create a sustainable recycling industry. The advantage of oligo-ester-ether-diol obtained from waste PET glycolysis is its application in r-PUF, generating a durable foam with excellent fire resistance at rather low loadings of phosphorus− nitrogen FRs (P−N FRs), especially in high moisture environments. Compared to polyurethane foam from commercial polyol (c-PUF), r-PUF is notably more thermally stable and efficient in terms of flame retardancy, even without adding FRs. By incorporating 15 php diammonium phosphate (DAP) as a P−N FR, r-PUF/DAP self-extinguished 5 s after the removal of the 2nd flame application with a limited oxygen index value of 24%. However, for c-PUF, a much higher DAP (30 php) loading did not exhibit any rating in the vertical burning test. The aromatic moiety in the oligo-ester-ether-diol structure strongly enhanced the compressive strength and thermal stability. The positive outcomes of this study also confirmed that the r-PUF/DAP prepared from oligo-ester-ether-diol not only satisfied the fire safety requirements of polymer applications but also contained a high percentage of postconsumer PET, which could help reduce the amount of recycled polymer materials and improve waste management.