The work aims to prepare the hydrophobic flame retardant microcapsules to improve the flame retardance and thermal stability of APP and reduce its effect on the physical property of paper. The core of microcapsules was prepared by ammonium polyphosphate, pentaerythritol and modified 4A molecular sieve, while the wall of microcapsules was prepared with sodium alginate and calcium chlorid and then coated with SiO2 particles to prepare flame retardant kraft paper. The flame retardance and thermal stability of the flame retardant kraft paper were characterized by limiting oxygen index (LOI) test, vertical burning test (VBT), smoke density test (SDT), micro calorimeter (MCC) and thermogravimetric (TG) analysis. The morphology of hydrophobic flame retardant microcapsules was characterized by field emission scanning electron microscopy (SEM) and transmission electron microscopy (TEM). The features of functional groups of samples were characterized with Fourier transform infrared spectroscopy. The tensile strength and tear strength of paper samples were tested according to the national standard. The limiting oxygen index of kraft paper coated with hydrophobic flame retardant microcapsules increased to 36.3%. Compared with the control group, the total smoke release, peak heat release rate and total heat release decreased by 42.44%, 52.4% and 36.1% respectively, and the tensile strength and tear strength increased by 8.2% and 177.1% respectively. According to the morphology characteristics, elemental analysis and infrared spectroscopy, the flame retardants were successfully coated and SiO2 particles were successfully deposited on the shell of microcapsules. The hydrophobic flame retardant microcapsules can effectively improve the flame retardance, smoke suppression performance and thermal stability of the flame retardants, thus enhancing the mechanical strength of the treated materials and reducing the hygroscopicity of the microcapsules.