Enhancing the resistance of sandy desert soil to drought and wind erosion is key to controlling aeolian desertification. Using biochar as an amendment can improve soil quality. This study aimed to determine the impacts of biochar particle size and application rate on the hydraulic and physical properties of sandy desert soil. Biochars were produced by pyrolyzing corn straw at 500 °C with limited oxygen. Samples of sandy desert soil were collected from the Tengger Desert in Northwestern China. Tests were designed with three biochar particle sizes (0–0.25, 0.25–1, and 1–2 mm) and five biochar application rates (wt%: 0, 0.5%, 1%, 2%, and 4%). Soil hydraulic and physical properties were characterized by the soil–water characteristic curve, soil porosity, soil specific surface area (SSA), and soil structural index (SI). The results showed that biochar significantly increased the soil porosity and the number of extreme micropores, micropores, and small pores. As a consequence, the saturated soil water content (θs), permanent wilting point (PWP), field capacity (FC), and available water content (AWC) were significantly enhanced. The significant improvement in SI demonstrated that biochar enhanced the soil aggregate stability, therefore, the resistance of sandy desert soil to wind erosion is enhanced. Biochar dosage was a more important factor that influenced the FC, AWC, PWP, SI, and SSA of the soil more than biochar particle size. The properties of θs, PWP, FC, AWC, and SI were all closely related to SSA, indicating that SSA played a key role in the mechanism affecting the response of the soil to biochar application. The significant increase in water retention and aggregate stability of sandy desert soil with added biochar suggests a novel strategy to control aeolian desertification by amending the soil.