Steam channeling is a commonly occurring phenomenon during steam flooding in heavy reservoirs. In this study, low-temperature expandable graphite was prepared to be employed as a steam plugging agent to resolve this problem. The preparation process was divided into two stages: (1) preoxidation and (2) deep oxidation and intercalation. The effects of the reagents and expansion temperature on the expansion capability were studied. An improved preparation formula for expandable graphite employed a mass ratio of graphite: H2O2:HClO4:KMnO4: acetic acid (HAc) as 1:2:6:0.5:1, and the expansion volume at 300 °C was 273 mL/g. Moreover, the initial expansion temperature was approximately 140 °C. In a water environment, the graphite particles demonstrated an expansion, which is less than that in a dry environment, and most layers maintained a good connection to ensure that the graphite sheets exhibited better anti-breaking strength. The Fourier transform infrared spectroscopy and X-ray diffraction analysis indicated that the intercalation reagents (HClO4 and HAc) successfully entered the graphite layers, and the crystallinity of graphite decreased gradually during the reaction process. The oxidants (H2O2, KMnO4) oxidized the edges of the graphite layers and slightly opened them, which provided the channels for the intercalation agents to enter the interlayer space. After expanding at 300 °C, a worm-like particle was formed. Through direct plugging, bridge plugging, and expansion capability, the low-temperature expandable graphite can control steam channeling. This study established a complete preparation technique of low-temperature expandable graphite that can be used for controlling steam channeling. This may serve as a reference for the preparation of steam plugging agents and an efficient development of heavy oil.