The thermal decomposition of poly(3‐difluoroaminomethyl‐3‐methyloxetane) (PDFAMO) with an average molecular weight of about 6000 was investigated using thermogravimetric analysis (TG) and differential scanning calorimetry (DSC). The kinetics of thermolysis were studied by a model‐free method. The thermal decomposition of PDFAMO occurred in a two‐stage process. The first stage was mainly due to elimination of HF and had an activation energy of 110–120 kJ mol−1. The second stage was due to degradation of the polymer chain. The Fourier transform infrared (FTIR) spectra of the degradation residues showed that the difluoroamino groups decomposed in a two‐step HF loss at different temperatures. The remaining monofluoroimino groups produced by the incomplete elimination of HF were responsible for the two‐stage thermolysis process. The compatibility of PDFAMO with some energetic components and inert materials used in polymer‐bonded explosives (PBXs) and solid propellants was studied by DSC. It was concluded that the binary systems of PDFAMO with cyclotrimethylenetrinitramine (RDX), 2,4,6‐trinitrotoluene (TNT), 2,4‐dinitroanisole (DNAN), pentaerythritol tetranitrate (PETN), ammonium perchlorate (AP), aluminum powder (Al), aluminum oxide (Al2O3) and 1,3‐diethyl‐1,3‐diphenyl urea (C1) were compatible, whereas the systems of PDFAMO with lead carbonate (PbCO3) and 2‐nitrodiphenylamine (NDPA) were slightly sensitized. The systems with cyclotetramethylenetetranitroamine (HMX), hexanitrohexaazaisowurtzitane (CL‐20), 3‐nitro‐1,2,4‐triazol‐5‐one (NTO), ammonium nitrate (AN), magnesium powder (Mg), boron powder (B), carbon black (C. B.), diphenylamine (DPA), and p‐nitro‐N‐methylamine (PNMA) were incompatible. The results of compatibility studies fully supported the suggested thermal decomposition mechanism of PDFAMO.