A novel formaldehyde-free phosphorus–nitrogen flame retardant with multiple reactive groups, dioxo (3-triethylphosphite-5-chlorine−1−triazine) neopentyl glycol (DTCTNG), has been synthesized and was applied to cotton fabrics. The molecular structure of DTCTNG was characterized by FTIR, 1H NMR, and 31P NMR. The thermal degradation property of DTCTNG was assessed by thermogravimetric analysis (TGA), which revealed that it has good thermal stability on the high temperature condition. To achieve a covalent bond between DTCTNG and fiber matrix, the finishing conditions of cotton fabrics with different add-on's DTCTNG were investigated by using TGA, vertical flammability test, limiting oxygen index (LOI) and scanning electron microscope test (SEM). The water resistance of the treated cotton fabrics under optimal finishing condition was studied by LOI test. Furthermore, the mechanism of cross-linking reaction between DTCTNG and cotton fiber was discussed by attenuated total reflectance Fourier transform infrared spectroscopy (ATR-FTIR). All the results showed that cotton fabrics treated with DTCTNG has good flame retardancy and steady water resistance.