The “Water Diversion from Yangtze River to Huaihe River” project's Qingshui River sandy loam faces challenges such as poor water retention, high permeability, and low strength, which may lead to engineering disasters such as river landslide and leakage. Although traditional materials like lime and fly ash can improve soil properties, they cause environmental pollution. Therefore, using environmentally friendly xanthan gum to treat sandy loam has significant research significance. This study conducted experimental research on the engineering properties of sandy loam with different xanthan gum ratios. The results showed that xanthan gum could significantly improve the water retention characteristic of sandy loam. Under different xanthan gum ratios, the average permeability coefficient of the treated sandy loam decreased by 3–4 orders of magnitude after 7 days of curing. After 4 days of curing, the shear strength of the treated sandy loam can increase by 2 to 4 times. The microstructure of sandy loam treated with xanthan gum indicates that xanthan gum can adhere to the surface of sandy loam particles or fill the pores, forming a stable hydrogel and bridging connections, thereby significantly improving the structure of sandy loam. Therefore, using xanthan gum to treat sandy loam can effectively improve the engineering stability of the river.