Aluminium diethylphosphinate (AlPi-Et) and inorganic aluminium phosphinate with resorcinol-bis(di-2,6-xylyl phosphate) (AlPi-H+RXP) were compared with each other as commercially available halogen-free flame retardants in poly(butylene terephthalate) (PBT) as well as in glass-fibre-reinforced PBT (PBT/GF). Pyrolysis behaviour and flame retardancy performance are reported in detail. AlPi-H+RXP released phosphine at very low temperatures, which can become a problem during processing. AlPi-Et provided better limiting oxygen index (LOI) values and UL 94 ratings for bulk and PBT/GF than AlPi-H+RXP. Both flame retardants acted via three different flame-retardancy mechanisms in bulk as well as in PBT/GF, namely, flame inhibition, increased amount of char, and a protection effect of the char. AlPi-Et was more efficient in decreasing the total heat evolved of PBT in the cone calorimeter test. AlPi-H+RXP reduced the peak heat release rate of PBT more efficiently than AlPi-Et. An optimum loading of AlPi-Et in PBT/GF was found, which was below the supplier’s recommendation. This loading provides a maximum increase in LOI and a maximum decrease in total heat evolved.