Poor dimensional stability, sensitivity to microorganisms, and flammability restrict the application of wood in certain areas where these properties are critical. Although furfurylation can improve the physical and mechanical properties of wood, the heat and smoke release of furfurylated wood during combustion are dramatic and need to be addressed. As a kind of halogen-free phosphorus flame retardant, 9,10-dihydro-9-oxa-10-phosphaphenanthrene-10-oxide (DOPO) and its derivatives exhibit excellent performance in polymer composites. In this study, DOPO was dissolved in furfuryl alcohol (FA) and used to modify wood. The effect of DOPO on the thermal stability, combustion behavior, and physical and mechanical properties of furfurylated wood was investigated. The chemical structure, morphology, and char residue after combustion were also characterized. The studies show that DOPO can react with the FA polymer and is incorporated and homogeneously dispersed in the wood structure. Compared to untreated wood, furfurylated wood has a much higher heat and smoke release during combustion. The addition of DOPO remarkably reduces the heat release of furfurylated wood, and this effect increases as the amount of DOPO increases. When the amount of introduced DOPO of furfurylated wood is 7%, its total heat release is reduced by 37.4% and becomes comparable to the untreated wood. However, DOPO does not suppress smoke production effectively. DOPO improves the thermal stability of furfurylated wood by promoting char formation and inhibiting the diffusion of oxygen and the escape of pyrolysis products. The addition of DOPO has little effect on the physical and mechanical properties of furfurylated wood. The results indicate that the combination of DOPO and furfurylation could be an efficient way to prepare highly stable and fire-resistant wood materials.