This work evaluates the mid-term impact of the addition of large amounts of an organic amendment on the recovery of the physical, chemical and, particularly, the microbiological properties of a marginal semiarid degraded soil and on increasing the soil organic C pool. In order to perform this study, a semiarid degraded soil was treated with composted urban waste at doses equivalent to the addition of 1% (S + CCD1) and 3% (S + CCD2) of organic C (Corg). Changes in soil characteristics in the amended soils were evaluated with respect to a control soil without organic amendment for a period of 5 years after the organic amendment was applied. A spontaneous vegetal cover developed on both amended and unamended soils 3–4 months after the organic amendments were added, yet the level of vegetal biodiversity was lower in the amended plots. Compost-amended soils showed higher concentrations of Corg, water-soluble C and water-soluble carbohydrates than the control soil throughout the experimental period. Furthermore, all of these C fractions were significantly higher (p ≤ 0.05) in S + CCD2 than in S + CCD1 and the control soil. However, compost addition also increased soil electrical conductivity and nitrate content, particularly at the higher dose. Likewise, compost addition produced a 4- to 10-fold increase in soil heavy metal concentrations, although the levels of heavy metal were under the limits allowed in soils. Five years after the organic amendment was added, the soil water holding capacity, stable aggregate percentage, porosity and nutrient and humic substance and humic acid content were greater in amended soils than in control soil, and the higher dose produced greater increases than the lower dose. Soils receiving the highest dose of compost also showed the highest values of basal respiration, dehydrogenase activity and β-glucosidase and phosphatase activity, as well as a greater abundance of total PLFAs, bacterial and fungal PLFAs, and saturated and monounsaturated fatty acids. A greater level of functional diversity was also observed in amended soils, particularly in the soil receiving the higher dose of compost. It can be concluded that the addition of high doses of compost can be a suitable strategy for restoring semiarid degraded soils and for fixing C in these soils, provided that the organic material is of high quality and has a low concentration of heavy metals.