Phosphogypsum produced from wet-processed phosphoric acid mainly consists of calcium sulfate dihydrate, which is an important sulfur resource. The traditional sulfuric acid and cement process based on phosphogypsum suffers from unstable cement quality owing to impurities such as phosphorus and fluorine and kiln ringing caused by the low-melting phase. This study investigated sulfur recovery and value-added utilization of liquid slag from high-silica phosphogypsum via carbothermal reduction smelting. A phosphogypsum ingredient (PGI) system was constructed by adding appropriate amounts of silica, alumina, magnesium oxides, and iron oxides to meet the production requirements of slag wool. Carbothermal reduction smelting experiments suggested that the temperature and C/S molar ratio significantly affected the desulfurization rate and phase structure of the slag. More than 97.44 wt % of sulfur could be recovered with a C/S molar ratio of 0.5−0.8 at 1300 °C or above in the molten state, and the molten slag was an amorphous magnesium−calcium−aluminosilicate. The PGI desulfurization mechanism is discussed based on the phase transformation and slag microstructure evolution.