In this study, the effect of ultrafine phosphorus slag powder on the performance of concrete was discussed and its principle was analyzed from a microscopic point of view. The findings reveal that ultrafine phosphorus slag has a significant retarding effect; although it results in lower early compressive strength, the compressive strength and resistance to chloride ion penetration of the concrete are both enhanced at 28 d. The microscopic test found that the hydration exothermic peak of ultrafine phosphorus slag powder was obviously delayed, and the Ca(OH)2 content was relatively low, which indicated that the ultrafine grinding enhanced the pozzolanic activity of phosphorus slag in the later stage of hydration. The pore structure test found that the ultrafine phosphorus slag powder made the microstructure of the hardened paste denser. This discovery indicates that ultrafine phosphorus slag is suitable for concrete projects that require special retarding or high resistance to chloride ion penetration, helping to reduce cement usage and decrease CO2 emissions, and shows promising application prospects.