A novel solid flame retardant cyclic phenolphthalein (phenylene phosphonate) (CPPA) oligomer was synthesized in high yields through the reaction of phenylphosphonic dichloride with phenolphthalein under pseudo-high dilution conditions via polycondensation. Detailed structural characterizations of this oligomer were conducted using matrix-assisted laser desorption/ionization time-of-flight mass spectrometry, 1H NMR, 31P NMR, and FTIR. Furthermore, the flame-retardant efficiency of this oligomer in polybutylene terephthalate (PBT) was investigated using limiting oxygen index (LOI), UL-94 tests and Microscale combustion colorimetry (MCC). After adding 20 wt% CPPA, the LOI increased from 20.2% to 26.2% and the UL-94 V-0 rating was achieved. The PHRR and THR values of PBT/CPPA25% were decreased. Thermogravimetric analysis, FTIR, and pyrolysis/GC/MS were employed to elucidate the pyrolysis behavior of CPPA and PBT/CPPA. The residual morphologies of the residue of the PBT/CPPA25% system were investigated through scanning electron microscopy. Results showed that the CPPA oligomer could change the degradation path of PBT and improved the char formation of the PBT/CPPA system.