The low hygroscopic resistance of flame-retardant plywood prepared by impregnation decreases its durable flame retardancy and antifungal properties. In this study, we employed the circulating impregnation technology of veneer using 2 wt% melamine (MEL) solution, 15 wt% amino trimethylene phosphonic acid (AP) solution, and 2 wt% MEL solution again to prepare durable flame-retardant plywood via in situ synthesis of water-insoluble MEL amino trimethyl phosphate (MEL-AP) in wood structures. The presence of 11.2 wt% MEL-AP in plywood (MAM-PW) resulted in a V-0 rating in vertical burning (UL-94), a high limiting oxygen index of 36.2%, and a significant reduction in the peak-heat-release-rate (−35.7%) with a significantly longer ignition time compared with that of bare plywood. In addition, MAM-PW exhibited a lower moisture content (21%) and higher leaching resistance value (57%) than commercial flame-retardant-plywood (38% and 3%, respectively) after 7 days of testing. The MEL-AP deposits in wood micropores decomposed to polyphosphoric acids to facilitate the charring of wood under heat, leading to a smooth and bubble-shaped phospho-carbonaceous structure in the condensed phase. Simultaneously, inert gasses were released to dilute the flammable volatiles accompanied by wood decomposition in the gas phase. These results strongly suggest that circulating impregnation has great potential as a sustainable and efficient strategy to prepare fire-proofing plywood with excellent hygroscopic and leaching resistance.