A new‐type flame retardant DEZ of bi‐DOPO compound containing bi‐hydroxy and two amino groups, was synthesized from terephthalonitrile, hydroxylamine hydrochloride, and 9,10‐dihydro‐9‐oxa‐10‐phosphaphenanthrene‐10‐oxide, and used with curing agent 4,4′‐diamino‐diphenylmethane to prepare flame retard epoxy resin (EP) composites. 1H and 31P nuclear magnetic resonance spectra and Fourier transform infrared spectra have determined the chemical structure of DEZ. The properties of cured EP composites were explicitly evaluated by differential scanning calorimeter, thermogravimetric analysis, the limiting oxygen index (LOI), vertical burning (UL‐94) test, cone calorimetry test, and flexural test. The 1 wt% addition of DEZ could improve the EP composites by almost 14.4% of flexural strength and 29.6% of flexural modulus, respectively. The LOI of EP composites with 5 wt% of DEZ was 29.7% and EP composites reached a V‐0 rating in the UL‐94 test, as well as total heat release was decreased by 11.2%. All EP modified by DEZ exhibited a blow‐out effect in the combustion process, which was due to the release of pyrolysis gases and incombustible gases containing phosphorus radicals and nitrogen compounds.