The present invention relates to a lead-free, bismuth-free free-cutting phosphorous brass alloy and its method of manufacture. The alloy comprises: Cu; Zn; 0.59 to 1.6 wt % P; and other elements in the amount of 0.005 to 0.6 wt %, which comprise at least two elements selected from the group consisting of Al, Si, Sb, Sn, Rare earth element (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 40 wt %. 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 relies upon P to ensure excellent cuttability of the invented alloy. The invented alloy is reasonably priced, and has excellent cuttability, castability, hot and cold workability, dezincification corrosion resistance, mechanical properties and weldability. The phosphorous brass alloy is a useful alloy for spare parts, forging and castings that require cutting, and particularly in forging and castings for low pressure die casting that requires cutting, grinding, welding and electroplating. The phosphorous brass alloy may also be used for faucets, valves and bushings of water supply systems, and for bar and wire materials that require high corrosion resistance and compactness.