In an attempt to develop an efficient flame retardant for epoxy resin (EP), a hierarchical “dots-core–shell” structure Ag@HNT@PZE was prepared via simple two-step reactions including in-situ growth of Ag within halloysite nanotubes (HNT) and a crosslinking polymerization of polyphosphazene (PZE) coating on Ag@HNT surfaces. Wherein, the dots represented Ag nanoparticles, the core represented HNT, and the shell referred to PZE. Here, Ag encapsulated within HNT acts as an interfacial catalyst to effectively degrade toxicity gas (e.g. CO), while PZE acts as an interfacial compatibilizer for enhancing the dispersion and flame retardant efficiency of Ag@HNT@PZE in the matrix. The flammability and smoke toxicity of EP/Ag@HNT@PZE nanocomposites were both reduced greatly compared to neat EP. The limited oxygen index (LOI), UL-94 grade and char yield of composite EP/5Ag@HNT@PZE reached 33.6 ± 0.72%, V-0 level and 22.8% respectively. Moreover, the peak heat release rate (pHRR) was reduced by 34.2%, accompanied by a higher ratio of graphitized char layer. It showed that flammable pyrolysis products released from EP during combustion were distinctly inhibited because Ag nanoparticles could catalyze the conversion of flammable gas CO to nonflammable CO2, which were verified by the density functional theory (DFT) calculations. It was assumed that halloysite-based hybrid flame retardant could have an impact on toxicity-suppressing and catalyze char formation to produce a barrier effect. The combination of metal-immobilized at clay nanotubes interiors for agglomeration-tolerant and PZE-modified at clay nanotubes exterior for shell-protective provides a potential way to develop efficient flame retardant for the manufacture of nanocomposites with higher fire safety.