In this study, phosphorous-containing epoxy resin was first prepared by modifying o-cresol formaldehyde epoxy resin with 9,10-dihydro-9-xa-10-phosphaphenanthrene-10-oxide. Self-emulsified nitrogen-containing epoxy curing agent was prepared by the reaction of bisphenol A epoxy resin E-44, triethylene tetramine and acrylonitrile. Phosphorous- and nitrogen-containing epoxy emulsion was obtained by emulsifying the phosphorous-containing epoxy resin with the self-emulsified epoxy curing agent. Effects of parameters to the formation of epoxy emulsion were studied. The microstructure and size distribution of the epoxy latex were characterized by transmitting electron microscopy and Malvern particle sizer, respectively. The flame retardancy of the phosphorous- and nitrogen-containing epoxy thermoset was tested by limiting oxygen index, UL-94 test method and thermal gravimetric analysis. Scanning electron microscopy was used to observe the micro-morphology of char residue of epoxy thermoset. The result shows that the prepared phosphorous- and nitrogen-containing epoxy emulsion presents excellent stability and the epoxy thermoset has excellent flame retardancy.