Tetra-hydroxymethyl phosphonium chloride (THPC) has been considered as an important chrome-free tanning agent. To understand the THPC tanning mechanism, the structure, charge distribution, activity and tanning ability of each phosphorous compound in THPC tanning system were studied, by P-31 NMR, FT-IR spectroscopy, differential scanning calorimetry (DSC) and computational chemistry method, etc. When pH raised to 6.0, the decomposition of THPC would take place, which results in a production of free formaldehyde, tri-hydroxymethyl phosphonium (TrHP) and tri-hydroxymethyl phosphine oxide (TrUPO). At pH 9.0, THPC will be converted completely to TrHP and most TrHP is further oxidized into TrHPO. It is possible that, in reaction of phosphorous compounds and collagens, both P-C and C-O bonds would break simultaneously or individually. From molecular charge distribution and bond polar properties, it is deduced that, if P-C bonds break, the activity is in order of TrHPO>THPC>TrBP, whereas if C-O bonds break, the order is TrHP>THPC>TrHPO. It is more possible that P-C bonds will break in reaction with collagen, and TrHPO may be more active in the THPC tanning system. The results of tanning and DSC also prove the above conclusion. Furthermore, the fact that the shrinkage temperature of THPC tanned leather was below 70 degrees C when basified to pH 5.0 or lower suggests that the hydroxymethyl groups of THPC and TrHP are less possible to combine directly with amino groups of collagen.