The Adelaide and Port Adelaide star was a marquee name when the AFLW started in 2017 and she joins women's pioneer Debbie Lee, who was inducted four years ago.
Phillips paid an emotional tribute to her dad Greg, and Lee, who were at Tuesday's annual induction dinner in Melbourne, in her acceptance speech.
"To Dad, I can't imagine how hard it would have been to tell your 13-year-old daughter that she couldn't play the game she loves any more," she said.
"And 27 years later, she's standing next to you in the hall of fame."
Phillips thanked the "incredible women" who made the AFLW possible and singled out Lee.
"You kicked down this door so others could walk through," she said. "I'm so proud to be by your side and I can't wait to kick down more doors with you Deb."
Phillips ended her stellar playing career at the end of 2022. The five-year player eligibility rule for the Hall of Fame was changed for women last year. AFLW players can now be inducted within a year of retirement and she was an obvious candidate.
Her father, Port Adelaide great Greg, was inducted in 2020. Fos and Mark Williams, Hayden Bunton Sr and Jr and umpires Jack McMurray Sr and Jr are the father-son inductees.
Phillips was Adelaide's inaugural captain and the first women's best and fairest winner, playing in three Crows flags despite needing a knee reconstruction.
She then switched to Port Adelaide when they joined the league in 2022.
When the women's league started in 2017, marquee players such as Phillips were crucial for its profile and credibility.
Phillips, a former WNBA and Australian basketballer, immediately established herself as one of the AFLW's elite players.
Also on Tuesday night, South Australian goalkicking machine Ken Farmer was elevated to legend status and St Kilda great Nick Riewoldt joined Phillips as inductees.
Farmer, who died in 1982, is the SANFL's most prolific goalkicker, with 1417 for North Adelaide from 1929-41 in 224 games at an extraordinary average of 6.33 per game.
He was never goalless in a game and coached the Roosters to two premierships.
Riewoldt holds St Kilda's record for the most games as captain, with 221 of his 336 matches. His induction was delayed because his family spent time in the United States.
The key forward was a five-time All Australian who went agonisingly close to a premiership, playing in St Kilda's draw and two losses across 2009-10.
Riewoldt said he had made his peace with not being able to help the Saints win their elusive second flag
"Rather than feeling like I walked away with the game still owing me something, I walk away feeling like the game gave me absolutely everything," he said.
Seven-time East Perth premiership player George Owens was this year's first historical inductee.
Apart from his swathe of premierships at East Perth and the 1925 Sandover Medal, Owens also umpired five WAFL grand finals.
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