In this work, a phosphorylated biobased-FR was synthesized by the ring-opening reaction of epoxidized downstream corn oil. The addition of only 7.5 wt% of the as-synthesized biobased-FR was found to be effective at achieving a UL-94 fire class of flame retardancy within the tested engineering plastics, poly(butylene terephthalate) (PBT) and poly(trimethylene terephthalate) (PTT). The amount of FR required within the polymer matrix to impart flame retardancy is less in comparison to many conventional FRs. The UL-94 fire class of neat PBT improved from no rating to a V-2 rating after blending with a biobased-FR. In order to evaluate the flame retardancy mechanism, gaseous products generated during thermal degradation were analyzed by TGA-FTIR. The incorporation of the biobased FR in the polymer matrix lead to a significant reduction in the formation of flammable gaseous products and hence the ability to retard the fire. The gas-phase mechanism through reducing the production of flammable hydrocarbon substances is the major factor which effected the flame retardancy enhancements of PBT and PTT blends. The FR synthesized in this work from downstream corn oil could pave the way to develop many environmentally friendly FR plastic products for various advanced and next-generation applications. Overall, this FR can be used to develop a sustainable and value-added products by utilizing the coproduct of the bioethanol industry, downstream corn oil, which supports the circular economy model for a better future.