Reducing both the flammability and the frangibility of epoxy resins (EPs) while inhibiting the smoke toxicity of combustion presents a significant challenge. In this study, a hyperbranched low-phosphorus (P)-containing flame-retardant polymer (HBFR) was synthesized to chemically modify epoxy resin. Results demonstrated that the modified epoxy achieved a V-0 rating in the UL-94 test and exhibited a limiting oxygen index (LOI) of 31.5%, with a P content of only 0.42 wt %. The peak heat release rate (PHRR) and total smoke production (TSP) of C-EP92.5HBFR7.5 decreased by 31.4% and 19.1%, respectively, compared to cured pristine EP (C-EP). The maximum carbon monoxide emission of C-EP92.5HBFR7.5 decreased by 39.4% and 16.2% during combustion compared with C-EP and commercial flame retardants, respectively. Furthermore, the impact and flexural strength of C-EP92.5HBFR7.5 increased remarkably by 257.5% and 20.3%, respectively, due to the enhanced free volumes and toughening effects caused by HBFR. Meanwhile, the modified epoxy thermosets still maintained high Tg (>168 °C) and thermostability (Td5% > 361 °C). In sum, this work provides an efficient and eco-friendly strategy for concurrently enhancing the flame retardancy (FR) and toughness of epoxy thermosets.