Microencapsulated ammonium polyphosphate with a novel melamine-formaldehyde-tris(2-hydroxyethyl)isocyanurate resin (MFT resin) was prepared by in situ polymerization. This microencapsulated ammonium polyphosphate was named MFT–APP. The MFT resin and MFT–APP were characterized by FTIR, XPS, TGA and SEM. Polypropylene (PP)/MFT–APP and PP/MFT–APP/THEIC were prepared. Their thermal stability and flame retardancy were investigated through TGA, limiting oxygen index (LOI), vertical burning tests and cone calorimeter tests. SEM was used again to observe the morphology of char residues. The results illustrated that MFT–APP and MFT–APP/THEIC had excellent flame retardant properties on PP. Furthermore, a water resistant test demonstrated that PP/MFT–APP/THEIC had better flame durability than PP/APP/THEIC. TGA-FTIR and XPS results revealed that the efficient flame retardancy of MFT–APP/THEIC was mainly attributed to the formation of a compact and thermostable intumescent char on underlying materials during a fire.