Flame-retardant bio-based cellulose aerogels, with abundant renewable sources, are considered as promising sustainable heat-insulation alternatives to conventional petroleum-based foams. An environmentally friendly method was employed to fabricate phosphorylated microcrystalline cellulose (PMCC) aerogel through the gelation of PMCC/H2O dispersion and freeze-drying of PMCC hydrogel. The dispersion stability of PMCC and its readiness to undergo gelation in the aqueous phase were enhanced by increasing the phosphorous content via phosphorylation, thereby effectively weakening the strong intra- and intermolecular hydrogen-bond interactions of the cellulose chains. The morphology of the PMCC aerogel changed from a short rod-shaped and sheet-like aggregation of a three-dimensional skeleton structure to a mostly sheet-like aggregation of a three-dimensional structure with increased phosphate esterification. Remarkably, PMCC aerogels exhibited improved flame retardancy and superior suppression of toxic gas, compared to MCC. This is attributable to the synergic effect of phosphate dehydration, catalytic carbonization, and protection of the aerogel network structure.