Abstract: Red soil is one of the most widely distributed soil types in Yunnan Province of China. Red soil is characterized by high plasticity, high void ratio, heavy viscosity, slightly acidic soil, as well as low water and fertility retention. Among them, alternate wetting and drying can be caused by rainfall, irrigation, high-temperature evaporation, and disturbances in production and construction projects, leading to the shrinkage, cracking, and swelling of red soil during drought. Soil water characteristics change dramatically, which is essential to carry out soil improvement in red soil regions. Soil reconstruction has been widely used in the practice of red soil improvement. Most research focuses mainly on the hydraulic properties of the natural red soil, rather than the reconstructed one. Furthermore, the wood fiber can be expected to serve as an ecological soil conditioner, in order to improve the ecological restoration, of the soil, and water conservation in the mining areas. However, it is still lacking on the effects of wood fiber additions on the physical properties of red soil in the combination of dry and wet alternation and wood fiber. In this study, a novel mechanism was proposed to clarify the impact of wood fiber reconstruction on the hydraulic properties of red soil during dry and wet alternation. The red soil was collected in Kunming City of Yunnan Province in China. Four types of wood fiber additions (0, 0.5%, 2.5%, and 5.0%) were used to improve the red soil. The matric suction of wood fiber composite soil was measured using filtering, and the soil-water characteristic curve (SWCC) was fitted using the Logistic model. The results showed that there was a gradually slow hysteresis in the dry-wet alternation on the decrease in the soil matric suction and SWCC of red soil, as the addition of wood fiber increased. Specifically, 2.5% wood fiber composite soil was the optimal ratio to improve soil water holding. The addition of wood fiber increased the intake and residual value of red soil. The residual value changed greatly under dry and wet alternations, whereas, there was a gradual decrease in the residual value, as the number of dry and wet alternations increased. The slope of 2.5% wood fiber composite soil was less affected by the dry and wet alternations, with the best capacity of water holding, while the volumetric water content decreased. The determination coefficients of soil-water characteristic curves were all above 0.97 after wood fiber addition, indicating that the Logistic model was suitable for the SWCC fitting of red soil that was modified with the wood fiber. The finding can provide a strong reference for soil reconstruction and ecological restoration during land consolidation in the red soil regions. A series of experiments were also carried out to determine the different amounts of wood fiber during dry and wet alternation. The relationship was also established between the impact of wood fiber improvement on the hydraulic properties of red soil. Since the specific impact can be depended on the physical indicators of the soil mass, further research can be expected to focus on the soil pore structure, aggregates, and permeability in the red soil.