We fabricate ultrasmall phosphorene quantum dots (PQDs) with an average size of 2.6 ± 0.9 nm using a liquid exfoliation method involving ultrasound probe sonication followed by bath sonication. By coupling the as-prepared PQDs with microfiber evanescent light field, the PQD-based saturable absorber (SA) device exhibits ultrafast nonlinear saturable absorption property, with an optical modulation depth of 8.1% at the telecommunication band. With the integration of the all-fiber PQD-based SA, a continuous-wave passively mode-locked erbium-doped (Er-doped) laser cavity delivers stable, self-starting pulses with a pulse duration of 0.88 ps and at the cavity repetition rate of 5.47 MHz. Our results contribute to the growing body of work studying the nonlinear optical properties of ultrasmall PQDs that present new opportunities of this two-dimensional (2D) nanomaterial for future ultrafast photonic technologies.