A flame-retardant functionalized boron nitride (BN@DT) was prepared through the modification of boron nitride (BN) by a reaction product (DT) among 9, 10-dihydro-9-oxa-10-phosphaphenanthrene-10-oxide (DOPO), 4-aminobenzoic acid, and p-phthalaldehyde, and the effect of BN@DT on flame retardancy, thermal conductivity and mechanical properties of epoxy resin (EP) was investigated. The EP composite with 15 wt% BN@DT (EP/15BN@DT) achieves the UL-94 V-0 rating and a limiting oxygen index of 40%. The peak heat release rate, total heat release and total smoke production of EP/15BN@DT are reduced by 36.3%, 31.9% and 38.9%, respectively compared with the ones of pure EP. The thermal conductivity of EP/15BN@DT increases by 148% in comparison with that of pure EP. Moreover, the tensile and impact strengths of EP/15BN@DT are higher than the ones of the EP composite containing 15 wt% unmodified BN. This work provides a promising method for the preparation of the thermally conductive EP composites with excellent flame retardancy.