At present, developing a flame-retardant unit to solve the flammability and melt-dripping of poly(ethylene terephthalate) (PET) still is a key issue. To endow PET with good flame retardancy and low smoke releasing, a third monomer, N, N′-bis(2-hydroxyethyl)-biphenyl-3,4,3′,4′-tetracarboxylic diimide (BPDI) containing biphenyl biimide and without any traditional flame-retardant elements, is synthesized and incorporated to the main chain of PET to obtain the P(ET-co-BP)n copolyester via melt polymerization. The thermal stability, combustion and pyrolysis behaviors of the obtained copolyesters have been well investigated. Thermogravimetric analysis (TGA) results demonstrate that introducing BPDI into PET obviously improves its thermal stability and the forming ability of char residue. LOI, vertical UL-94 and cone calorimeter measurements have been applied to investigate the combustion behaviors of P(ET-co-BP)n. The results prove that P(ET-co-BP)n copolyesters containing biphenyl biimide show better fire safety, reflected by lower fire growth rate (FIGRA) and low smoke production. SEM and Raman results suggest that the char layers of P(ET-co-BP)n become denser and mainly consist of polyaromatic species with small and uniform microstructures. The pyrolysis behaviors of the copolyesters are investigated by Py-GC/MS, and the results showed that the biphenyl biimide structure units can lead to rearrangement reactions at high temperature, ultimately forming the phenanthrene ring structures during combustion. Without traditional flame-retardant elements like halogen and phosphorus, this novel PET copolyester is environmentally friendly and more safety.