The effect of P addition on the nano-crystallization of Fe81.5Si0.5B15.5-xPxCu0.5C2 (x = 0, 4.5, 7.5, 11 at.%) amorphous alloys under various heating rates has been studied. Appropriate P addition enhanced the thermal stability of Fe–Si–B–P–Cu–C amorphous alloys. The results also revealed that P addition could decrease the required critical heating rate for the low coercivity and improve the magnetic softness of annealed samples. Although as commonly found in most Fe-based nano-crystalline alloys, a small amount of P addition (4.5 at.%) could effectively help reduce the coercivity when a high heating rate was applied during nano-crystallization, the high heating rate failed to decrease the coercivity in 7.5 at.% P-added alloys and even reversely caused the deterioration of magnetic softness for excessive P addition (11 at.%). The unusual phenomenon in the alloy with 11 at.% P addition lies in the fast increase of diffusion rate with rising temperature and delayed nucleation, which are caused by the weakened bond energy and increased segregation energy, respectively. The results suggest that the improvement of magnetic softness for Fe-based nano-crystalline alloys through simply increasing the P addition would meet its ceiling, due to the limited decrease in coercivity and even increase through applying high heating rate with excessive P concentration. The understanding of P role on the nano-crystallization mechanism could contribute to the compositional design of high-performance soft magnetic Fe-based alloys with an acceptable heating rate in industry.