In this study, a flame-retardant additive with 9,10-dihydro-9-oxa-10-phosphaphenanthrene-10-oxide (DOPO) groups denoted DSD was successfully synthesized from DOPO, 4,4′-diaminodiphenyl sulfone (DDS), and salicylaldehyde. The chemical structure of DSD was characterized by FTIR–ATR, NMR, and elemental analysis. DSD was used as an amine curing agent, and the transparent, tensile strength-enhanced epoxy resins named EP–DSD were prepared via thermal curing reactions among the diglycidyl ether of bisphenol A (DGEBA), 4,4′-diaminodiphenylmethane (DDM), and DSD. The flame-retardancy of composites was studied by the limiting oxygen index (LOI) and UL-94 test. The LOI values of EP–DSD composites increased from 30.7% for a content of 3 wt % to 35.4% for a content of 9 wt %. When the content of DSD reached 6 wt %, a V-0 rating under the UL-94 vertical test was achieved. SEM photographs of char residues after the UL-94 test indicate that an intumescent and tight char layer with a porous structure inside was formed. The TGA results revealed that EP–DSD thermosets decomposed ahead of time. The graphitization degree of the residual chars was also investigated by laser Raman spectroscopy. The measurement of tensile strength at breaking point shows that the loading of DSD increases the tensile strength of epoxy thermosets. Py-GC/MS analysis shows the presence of phosphorus fragments released during EP–DSD thermal decomposition, which could act as free radical inhibitors in the gas phase. Owing to the promotion of the formation of intumescent and compact char residues in the condensed phase and nonflammable phosphorus fragments formed from the decomposition of DOPO groups, EP–DSD composites displayed obvious flame-retardancy.