Enhanced processing is of paramount importance in manufacturing polyethylene terephthalate (PET) products. At high temperatures, PET undergoes a range of interconnected chemical reactions, in particular oxidative crosslinking, which change its molecular structure. Potentially, this can lead to severe limitations in its processing and a total destruction of its properties. The crosslinking reactions of PET are significantly hindered in the presence of DOPO-PEPA (DP); an organophosphorus flame retardant with promising eco-friendly characteristics. Moreover, profound molecular lubrication of PET is observed during extrusion trials of PET/DP samples. A multiscale simulation scheme is developed by combining molecular dynamics and dissipative particle dynamics in order to determine the miscibility of DP and PET at a molecular level. Furthermore, rheological experiments are used to evaluate the thermal stability of PET/DP melts in air and nitrogen environments. By incorporating various chemical analysis techniques, a mechanism explaining the mode of action of DP molecule preventing the oxidative crosslinking reactions of PET chains during melt processing is proposed. The results indicate that these undesired reactions are significantly reduced by adding small amounts of DP. This is mainly ascribed to a thermal decomposition of DP resulting in the formation of phosphorus radicals including DOPO• and PO•. We identify a novel application of DP in added-value PET products with promising recycling opportunities.