Phosphorus-modified ZSM-5 zeolites were prepared with a novel method, hydrothermal dispersion. XRD showed that the catalysts prepared by the hydrothermal dispersion had better hydrothermal stability than that by impregnation. At the same time, more pronounced cracking activity and higher yield of ethylene plus propylene were obtained on the phosphorus-modified ZSM-5 catalysts prepared by hydrothermal dispersion. Highest yield of ethylene plus propylene was obtained when the loading of phosphorus was 0.68%. The higher amount of phosphorus fixed on the pores of zeolite, higher hydrothermal stability and appropriate acid amount were the possible reasons for obtaining higher yield of ethylene plus propylene.