Poly(ethylene terephthalate) (PET) has wide usage in packaging and fiber industries thanks to its superior mechanical, thermal, and barrier properties. It is also one of the "big five" recyclable plastics with well-established procedures. In many textile and film products, flame retardants (FRs) are added to PET for fire-safe applications. However, PET/FR products are often not designed for recycling, and downgrade during thermomechanical recycling due to polymer degradation. To address this issue, we study the behavior of PET containing phosphorus FRs during and after thermomechanical recycling. Two phosphorus FRs, namely DOPO-PEPA (DP) and Aflammit PCO 900 (AF), are added to PET by extrusion. The compounds are then studied by a comprehensive set of thermal, rheological, and chemical experiments to investigate their thermal, thermo-oxidative, and thermo-mechanical degradation mechanisms. The results indicate the high potential of DP to add enhanced lubrication, and control melt rheology over long periods by stabilization. On the other hand, AF can boost chain extensions and branching in PET, which can counter chain scissions to some extent. A chemical mechanism is proposed suggesting that both FRs can release active radicals and moieties that either quench other radicals such as oxygen radicals, or initiate a reaction with the PET chains leading to chain scissions and/or branching. Finally, a thermomechanical recycling process is simulated by reprocessing the PET compounds in extrusion and injection molding. The mechanical performance of the compounds before and after recycling is studied in tensile experiments. PET/DP samples preserve their ductile tensile behavior after recycling, whereas PET/AF samples become completely brittle. This work motivates future research on the synthesis of new phosphorus FRs based on mixed chemical characteristics of DP and AF for improved recyclability of PET/FR products.