A novel phosphorus and nitrogen-containing flame-retardant polyurethane prepolymer (FRPUP) was successfully synthesized and characterized by FTIR, H-1 NMR, and P-31 NMR. The flame-retardant polyurethane sealants (FRPUS) were prepared by curing FRPUP with castor oil. The flame-retardant properties of samples were investigated by the limiting oxygen index and cone calorimeter testing (CCT). The results showed that FRPUP can improve the flame retardancy of polyurethane sealants (PUS). The thermal decomposition behavior of the PUS was investigated by thermogravimetric analysis. Moreover, the thermal degradation mechanisms of FRPUS were investigated by thermogravimetric analysis/infrared spectrometry, FTIR, and X-ray photoelectron spectroscopy. The results indicated that the good flame retardancy of FRPUS can be attributed to the synergistic effect of phosphorus and nitrogen in FRPUP.