Composites based on poly(vinyl alcohol) (PVA) and aluminum hypophosphite (AHP) are prepared by solvent blending. The thermal, mechanical, and crystallinity properties of the composites are studied. AHP remarkably improves the char residue yield during the thermal degradation and combustion of AHP/PVA composites. The flame retardancy of the composites is obviously improved. The increased char which protects underlying PVA from heat and oxygen is one of the key reasons for the improved flame retardancy. The crystallinity of the composites is decreased. The glass transition temperature (T-g) and the storage modulus of the composites are increased. In the composite with 15 wt % AHP, limiting oxygen index (LOI) reaches 28.0%, UL-94 V-0 rating is obtained, T-g is increased by 7 degrees C, and the storage modulus is increased by 17.2% in comparison with neat PVA. Moreover, AHP/PVA composites keep high transparence and maintain most of the mechanical properties of PVA, which is advantageous for the practical application of the composites.