In this paper, a new method was used to prepare flame retardant thermoplastic polyurethane elastomer (TPU). Nickel phosphate with Ni(OH)(PO4)(2-) layers, Na(H3O)(2){Ni-4(OH)(4)(HPO4)(3)(H2PO4)} (NaNiP), was prepared by a hydrothermal method, and it was added to the TPU and intumescent flame retardant (IFR) system. The synergistic effect between NaNiP and IFR was studied. With the addition of 1 wt % NaNiP, the limiting oxygen index (LOI) value of the TPU/IFR system was increased from 27 to 32%. The UL-94 tests showed that TPU containing 20 wt % IFR had no rating, but TPU with 19 wt % IFR and 1 wt % NaNiP could reach the V-0 rating. The results of thermogravimetric analysis/infrared spectrometry (TGA-IR) showed that NaNiP could delay volatilized products in TPU/IFR system. Laser Raman spectroscopy (LRS) of residual char indicated that the ordered carbon was increased with the addition of 1 wt % NaNiP, and the content ratio of ordered carbon in outer char was larger than that in inner char. Scanning electron microscopy (SEM) indicated that NaNiP could help the TPU/IFR system form a dense and intumescent char layer. Therefore, a just-right formulation between IFR and NaNiP in TPU showed optimal synergistic effect. The synergistic mechanism was also proposed in this paper.