Abstract The utilization of cellulose remains underexploited due to the use of toxic solvents, high energy consumption, difficulty in separation, and environmental concerns during dissolution, processing, and separation processes. Herein, we present a pioneering approach for the synthesis of phthalic anhydride cellulose (PAC), the first reported anhydride‐form cellulose derivative, and in situ reactive separation of the cellulose derivatives by introducing ammonia gas. PAC is synthesized by a catalyst‐free esterification reaction between cellulose and trimellitic anhydride chloride (TMAC). Excess ammonia is then added to convert the anhydride into a water‐soluble amide‐ammonium salt, resulting in the complete precipitation of all reactants from the homogeneous organic phase, thus achieving in situ reactive separation without external precipitants and producing phthalamide acid cellulose (PAAC). A simple solid‐liquid separation allows for a solvent recovery efficiency of 90%. PAAC can dissolve in water and be processed into film and fiber materials, avoiding safety issues related to toxic or organic solvent processing. After processing, PAAC can be converted into phthalimide cellulose (PIC) or PAC by thermal treatment. PIC is a water‐insoluble imide‐form derivative with excellent resistance to organic solvents, acids, and heat, while PAC serves as a multi‐functional platform for carrying out various functional reactions of anhydrides on demand.