Diatomite (DIA) particles are commonly employed as flame‐retardant additives for polymers, yet their intrinsic inefficiency requires substantial quantities for optimal efficacy. To address this issue, we proposed a novel approach involving the microencapsulation of DIA with polyethylene glycol phosphate (PEGP) to enhance the flame retardancy of epoxy resin (EP). Characterization of the prepared DIA@PEGP utilized scanning electron microscopy with energy‐dispersive x‐ray spectrometry and Fourier transform infrared spectroscopy. The resulting EP composite, DIA@PEGP‐4/EP, achieved a limiting oxygen index of 33.2% and achieved a V‐0 level in vertical combustion tests. Compared to EP, DIA@PEGP‐4/EP demonstrated significantly improved fire performance, with 38.6%, 47.8%, 25.0%, 41.3%, and 60.4% reduction in peak heat release rate, total heat release, peak smoke production rate, total smoke production, and CO yield. Furthermore, the highest FPI value of 0.080 m2·s/kW for DIA@PEGP‐1/EP and the lowest FGI value of 8.734 kW/m2·s for DIA@PEGP‐4/EP, indicate that the incorporation of DIA@PEGP into EP enhances its fire safety. The flame retardancy mechanism of DIA@PEGP‐4 involves the formation of a phosphorus‐containing aromatic carbon layer during EP char formation, capturing radicals in the gas phase during combustion.