Abstract: Considering the solid solubility of P in the matrix of copper will be decreased rapidly with the temperature decrease and form the brittle intermetallic compounds Cu3P with Cu, the present invention elects P as one of the main elements for ensuring the excellent cuttability of the invented alloy. The lead-free free-cutting phosphorous brass alloy comprises: Cu, Zn, 0.4 to 1.6 wt % P. and other elements in the amount of 0.005 to 0.6 wt %, which comprise at least two elments selected from the group consisting of Al, Si, Sb, Sn, Re, Ti and B, and the balance being unavoidable impurities. The phosphorous brass alloy contains a combined wt % of Cu and Zn of between 97.0 wt % and 99.5 wt %, within which the content of Zn is above 35 wt %. The method of manufacturing the alloy is also disclosed. The invented alloy has excellent cuttability, castability, hot and cold workability, dezincification corrosion resistance, mechanical properties and weldability.