A new flame retardant polycarbonate/magnesium oxide (PC/MgO) nanocomposite, with high flame retardancy was developed by melt compounding. The effect of MgO to the flame retardancy, thermal property, and thermal degradation kinetics were investigated. Limited oxygen index (LOI) test revealed that a little amount of MgO (2 wt %) led to significant enhancement (LOI = 36.8) in flame retardancy. Thermogravimetric analysis results demonstrated that the onset temperature of degradation and temperature of maximum degradation rate decreased in both air and N2 atmosphere. Apparent activation energy was estimated via Flynn–Wall–Ozawa method. Three steps in the thermal degradation kinetics were observed after incorporation of MgO into the matrix and the additive raised activation energies of the composite in the full range except the initial stage. It was interpreted that the flame retardancy of PC was influenced by MgO through the following two aspects: on the one hand, MgO catalyzed the thermal-oxidative degradation and accelerated a thermal protection/mass loss barrier at burning surface; on the other hand, the filler decreased activation energies in the initial step and improved thermal stability in the final period.