The propagation of thermal runaway (TR) is a critical safety issue in lithium-ion battery modules, which can be mitigated by using aerogels, a new nano porous material with exceptional thermal insulating capabilities and flame resistance. In this study, we developed an environmentally friendly aerogel by combining chitosan (CS) and phytic acid (PA) through ambient pressure drying. The optimal PA composition was 5wt%, and the corresponding aerogel achieved a limit oxygen index (LOI) value of 45.6% and V-0 rate in UL-94 tests, demonstrating excellent flame retardancy. With a low density of 0.163 g/cm³, the aerogel exhibited a thermal conductivity of 0.0309 W/(m·K), making it an effective thermal insulator. The rigid porous structure of the composite aerogel provided a maximum compressive strength of 25.8 MPa and a compressive modulus of 5.58 MPa. To study the effect of the aerogel in mitigating TR, we simulated TR conditions by heating blocks to 300°C. The aerogel significantly reduced the temperature rise in adjacent blocks, effectively inhibiting TR propagation. These findings indicate that the CS/PA aerogel offers superior thermal insulation, flame-retardant properties, and robust mechanical strength, making it a promising material for enhancing the safety of lithium-ion battery modules.