The eco-friendly flame retardancy of polycarbonate (PC) was achieved by blending with phosphorylated-PC in the range of 1-5% w/w. Dynamic properties were characterized using broadband dielectric relaxation spectroscopy (DRS), while structural and thermal properties were investigated using Fourier transform infrared spectroscopy, wide-angle X-ray diffraction, small-angle X-ray scattering, differential scanning calorimetry, and thermogravimetric analysis. A reduction in the single glass transition temperature with increasing phosphorylated-PC content was observed, indicating that the blends were miscible. No crystalline phases were detected in any of the samples. The thermo-oxidative stability and UL-94 ratings of flame-retardant polycarbonates (FRPCs) improved compared to neat PC, with char residue increasing as the phosphorylated-PC content rose. DRS analysis revealed the formation of a well-defined local (beta) relaxation in the FRPC samples, originating from the motion of phosphorylated branches. All samples exhibited the segmental (alpha) relaxation of PC chains above the glass transition temperature. The size of the cooperatively rearranging domain played a significant role in the dynamic fragility of the rigid FRPCs. Additionally, DRS analysis highlighted the presence of physical crosslinks from nanoclusters of phosphorylated polar groups, approximately 14 nm in size.