A novel phosphorus-containing compound diphenyl-(1, 2-dicarboxylethyl)-phosphine oxide defined as DPDCEPO was synthesized and used as a flame retardant curing agent for epoxy resins (EP). The chemical structure of the prepared DPDCEPO was well characterized by Fourier transform infrared spectroscopy, and 1 H, 13 C and 31 P nuclear magnetic resonance. The DPDCEPO was mixed with curing agent of phthalic anhydride (PA) with various weight ratios into epoxy resins to prepare flame retardant EP thermosets. The flame retardant properties, combustion behavior and thermal analysis of the EP thermosets were respectively investigated by limiting oxygen index (LOI), vertical burning tests (UL-94), cone calorimeter measurement, dynamic mechanical thermal analysis and thermogravimetric analysis (TGA) tests. The surface morphologies and chemical compositions of the char residues for EP thermosets were respectively investigated by scanning electron microscopy and X-ray photoelectron spectroscopy (XPS). The water resistant properties of the cured EP were evaluated by putting the samples into distilled water at 70°C for 168 hr. The results revealed that the EP/20 wt% DPDCEPO/80 wt% PA thermosets successfully passed UL-94 V-0 flammability rating and the LOI value was as high as 33.2%. The cone test results revealed that the incorporation of DPDCEPO effectively reduced the combustion parameters of the epoxy resin thermosets, such as heat release rate and total heat release. The dynamic mechanical thermal analysis test demonstrated that the glass transition temperature (Tg) decreased with the increase of DPDCEPO content. The TGA results indicated that the incorporation of DPDCEPO promoted the decomposition of epoxy resin matrix ahead of time and led to a higher char yield and thermal stability at high temperatures. The surface morphological structures and analysis of the XPS of the char residues of EP thermosets revealed that the introduction of DPDCEPO benefited the formation of a sufficient, compact and homogeneous char layer with rich flame retardant elements on the epoxy resin material surface during combustion. The mechanical properties and water resistance of the cured epoxy resins were also measured. After water resistance tests, the EP/20 wt% DPDCEPO/80 wt% PA thermosets retained excellent flame retardancy, and the moisture adsorption of the EP thermosets decreased with the increase of DPDCEPO content in EP thermosets because of the existence of the P-C bonds and the rigid aromatic hydrophobic structure in DPDCEPO.