A novel flame-retardant ternary composite of polymer/crosslinked rubber/nano-Magnesium hydroxide (MH), prepared by blending thermoplastic polymer with a special compound powder of crosslinked rubber/nano-MH, was introduced in this paper. The special compound powder of crosslinked rubber/nano-MH was prepared by co-spray drying the fluid mixture of nano-MH slurry and irradiated rubber latex. The cone testing results showed that the new flame-retardant ternary composite had better flame retardancy than the composite obtained by conventional process, such as longer “Time to ignition” and lower “mean heat release rate in initial time”. Thermogravimetry and transmission electron microscope were used to analyze the reason of different flame retardancy. It is found that more uniform dispersion of nano-MH in the new ternary composite than in conventional one maybe the main reason for better flame retardancy.