Flame-retarded poly(1,4-butylene terephthalate) (PBT) has been prepared using aluminum hypophosphite (AHP) and tri(1-oxo-2,6,7-trioxa-1-phosphabicyclo[2,2,2]octane-methyl)phosphate (Trimer). The combustion properties of flame-retarded PBT were evaluated using limiting oxygen index, UL-94, and cone calorimetry. The cone calorimeter data indicated that the presence of PBT/AHP/Trimer imparted a significant smoke-suppressing effect. The thermal degradation properties of flame-retarded PBT were investigated using thermogravimetric analysis Fourier transform infrared and thermogravimetric analysis mass spectrometry. For the samples of PBT, PBT/25% AHP, and PBT/AHP/Trimer, the main gas pyrolysis products were CO2 and butadiene; the sample of PBT/AHP/Trimer generated less CO2 and butadiene and consequently retained more carbon in the matrix. The amount of phosphorus oxygen radicals of PBT/25% AHP was 1.3 times that of PBT/AHP/Trimer, which indicated that AHP alone showed slightly stronger gaseous phase effect than the combination of AHP and Trimer. This result is further confirmed by the analysis of the char residues by X-ray photoelectron spectroscopy.