A highly efficient flame retardant and smoke suppression oligomer, oligo(phenylphosphonic dihydroxypropyl silicone oil) (PPSO), was synthesized by a one-step reaction. The chemical structure of PPSO was confirmed by Fourier transform infrared (FTIR), 31P nuclear magnetic resonance ( 31P NMR), and 29Si nuclear magnetic resonance ( 29Si NMR). The flame-retardant effect of PPSO on the polycarbonate (PC) matrix was investigated by limiting oxygen index, UL-94 vertical burning test, and cone calorimetry, respectively. The results showed that PC/PPSO composites passed UL-94 V-0 rate testing with only 1.3 wt. % PPSO. Furthermore, the incorporation of PPSO can suppress the release of smoke. The flame-retardant mechanism was also investigated via thermogravimetric analysis-fourier transform infrared spectroscopy (TG-FTIR), field-emission scanning electronic microscopy (FE-SEM), X-ray photoelectron spectroscopy (XPS) and Raman spectroscopy. From the result of pyrolysis gas and char residue, PPSO played a synergistic flame-retardant mechanism including the gas phase and the condensed phase.