The utilization of biomass as a raw material and production of hydrothermal humic acid (HHA) through hydrothermal method using hydrochar as an intermediate product is a sustainable approach for the preparation of humic acid. In this study, hydrochar was prepared through acid hydrothermal treatment of corn straw and then oxygen was introduced to alkaline hydrothermal treatment of hydrochar to improve the yield of humic acid. It was discovered that an oxygen pressure of 5 bar could significantly enhance the yield of HHA from 41.9 wt% to 49.2 wt% at a hydrothermal temperature of 180 °C, while oxygen pressures of 10 bar and 20 bar led to a decrease in HHA yield (41.5 wt% to 28.2 wt%). Oxygen addition could also reduce the energy input and the economic cost required for hydrothermal reactions. Further study revealed that the increase in HHA yield was the oxidation of aliphatic carbon in the solid residue derived from hydrochar by oxygen, which became part of the HHA and resulted in weaker fluorescence intensity of the HHA. However, excessive oxygen could increase the oxygen-containing functional groups of the HHA while also causing further cleavage of macromolecular components with high carbon numbers, generating smaller molecules that partially dissolve in the liquid phase. The HHA synthesized at an oxygen pressure of 5 bar showed good performance in promoting Chinese cabbage seedlings growth and was superior to the HHA synthesized in the absence of oxygen in terms of cadmium adsorption. This study proved an improved hydrothermal humification method and provided technical support for industrial applications.