Cellulose from wood fibers can be modified for use in flame-retardant composites as an alternative to halogen-based compounds. For this purpose, sulfite dissolving pulp fibers have been chemically modified by phosphorylation, and the resulting material has been used to prepare cellulose nanofibrils (CNF) that have a width of approximately 3 nm. The phosphorylation was achieved using (NH4)2HPO4 in the presence of urea, and the degree of substitution by phosphorus was determined by X-ray photoelectron spectroscopy, conductometric titration, and nuclear magnetic resonance spectroscopy. The presence of phosphate groups in the structure of CNF has been found to noticeably improve the flame retardancy of this material. The nanopaper sheets prepared from phosphorylated CNF showed self-extinguishing properties after consecutive applications of a methane flame for 3 s and did not ignite under a heat flux of 35 kW/m2, as shown by flammability and cone calorimetry measurements, respectively.