The productivity of sandy soils is mostly limited by their low water-holding capacity and excessive deep percolation losses, which reduce the efficiency of water and fertiliser use by plants. The effect of a crosslinked-type polyacrylamide, ALCOSORB 400, on water-holding capacity of a sandy soil, siliceous sands, was studied under the laboratory and glasshouse conditions. Water-holding capacity of the soil exposed to 0.01 MPa increased by 23 and 95% by adding 0.03 and 0.07% of polyacrylamide to the soil, respectively. This indicated that the soil treated with polyacrylamide was able to store more water than untreated soil, thereby reducing the potential losses due to deep percolation in sandy soils. However, the polyacrylamide in the treated soil did not significantly increase the quantity of water released from the soil by increasing the pressure from 0.01 to 1.5 MPa. The results from the first glasshouse experiment demonstrated that the excess amount of water stored in the soil by polyacrylamide was available to plants and resulted in higher water use and grain production. Consequently, there was a 12 and 18 fold increase in water use efficiency of soybean plants grown in soils treated with 0.03 and 0.07% polyacrylamide, respectively. The results from the second glasshouse experiment demonstrated that increasing amounts of polyacrylamides in a sandy soil can extend the irrigation interval without any adverse effect on the grain yield of soybeans.