Aim: The purpose of this work was to study the feasibility of producing economic flame retardant bacterial cellulose (BC) and evaluating its behaviour in paper production. Methods and Results: This type of BC was prepared by Gluconacetobacter subsp. xylinus and substituting the glucose in the cultivation medium by glucose phosphate as a carbon source; as well as using corn steep liquor as a nitrogen source. The investigated processing technique did not dispose any toxic chemicals that pollute the surroundings or cause unacceptable effluents, making the process environmentally safe. The fire retardant behaviour of the investigated BC has been studied by non-isothermal thermogravimetric analysis (TGA & DTGA). The activation energy of each degradation stage and the order of degradation were estimated using the Coats-Redfern equation and the least square method. Strength, optical properties, and thermogravimetric analysis of BC-phosphate added paper sheets were also tested. Conclusions: The study confirmed that the use of glucose phosphate along with glucose was significant in the high yield production of phosphate containing bacterial cellulose (PCBC1); more so than the use of glucose phosphate alone (PCBC2). Incorporating 5% of the PCBC with wood pulp during paper sheet formation was found to significantly improve kaolin retention, strength, and fire resistance properties as compared to paper sheets produced from incorporating bacterial cellulose (BC). Significance and Impact of the Study: This modified BC is a valuable product for the preparation of specialized paper, in addition to its function as a fillers aid.