Improving the physical properties and water retention of sandy soils is of critical importance in arid and water-scarce regions such as Saudi Arabia. The impacts of organic amendments of different particle sizes coupled with natural clay deposits on improving the soil physio-chemical characteristics, nutrient availability, and growth of Sudan grass were investigated in this study. A loamy sand soil was amended with natural clay deposits at 2.5%, 5.0%, and 10% (w/w) application rates, and in combination with 1.0% (w/w) wheat straw of different particle sizes. The water infiltration, evaporation, and retention characteristics of the amended soil were studied for 9 weeks, and then Sudan grass was grown for 7 weeks. The impacts of the particle size of wheat straw on soil properties and nutrient availability were significant (p < 0.05) when combined with clay deposits. The highest application rate of clay (10%) demonstrated the highest water content (20.63–21.73%), and increased P and K availability to 35.54 and 6980 mg kg−1, respectively, in soil, which were 33% and 88% higher, respectively, compared to the control. Plant N, P, and K concentrations were increased to 0.95%, 0.26%, and 4.33%, respectively, which were 2–3.5-fold higher than the control. Therefore, the integrated application of natural clay deposits and wheat straw of fine particle size could be an effective strategy in improving plant production in water-scarce regions.