The use of biochar, which is the solid product of biomass pyrolysis, in agricultural soils, has been shown as a strategic solution for building soil carbon stocks and mitigating greenhouse gas emissions. However, biochar amendment might also benefit other key soil processes and services, such as those that are related to water retention, particularly in sandy soils. Here, we conducted an experiment to investigate the potential of biochar to enhance pore size distribution and water retention properties in a tropical sandy soil. Three biochar rates were incorporated (equivalent to 6.25, 12.5, and 25 Mg ha−1) into plastic pots containing a sandy Oxisol sampled from a sugarcane field in Brazil. Undisturbed samples of the mixture were collected at two evaluation times (50 and 150 days) and used to determine water retention curves and other soil physical properties. The results showed that biochar amendment decreased soil bulk density and increased water retention capacity, micropore volume, and available water content. Higher soil water retention in amended soil is associated with the inherent characteristics of biochar (e.g., internal porosity) and potential improvements in soil structure. Microporosity and water retention were enhanced with intermediate biochar rate (12.5 Mg ha−1), instead of the highest rate (25 Mg ha−1) tested. Further studies are needed to validate these results under field conditions.