(1) Background: this study investigates the impact of acid value changes on the thermal degradation and fire risks of palm oil. It emphasizes the need for systematic risk management in food manufacturing and preparation processes to address safety challenges associated with high-temperature operations. (2) Methods: the study employed fire reproduction experiments, fire risk characterization tests, and thermal analyses, including differential scanning calorimetry and thermogravimetric analysis. (3) Result: higher acid values in palm oil significantly reduce smoke points, ignition points, and thermal stability, primarily due to increased free fatty acids and oxidative by-products. These effects are more pronounced in oxidative environments, highlighting the importance of controlling acid value to mitigate fire and thermal risks. (4) Conclusions: this study concludes that increased acid value in palm oil significantly reduces its thermal stability and elevates fire risks due to accelerated oxidation and thermal decomposition. It emphasizes the importance of monitoring acid value and implementing temperature control measures to enhance safety in food manufacturing and cooking processes.