Crop residue management at the soil surface controls C sequestration and soil erosion. The size and distribution of crop residues incorporated into the topsoil affect soil physical properties. The objective of this work was to analyze the immediate effect of straw incorporation on the hydraulic properties of soil. Laboratory experiments were performed to determine the retention and the hydraulic conductivity curves of soil and wheat (Triticum aestivum L.) straw mixtures. The samples consisted of 1-cm straw pieces mixed with loamy soil aggregates of 2 to 3 mm in diameter. Volumetric straw contents were 0, 0.1, 0.2, and 0.3 cm3 cm−3. Suction table and pressure extractor methods were used to measure the water retention curve. Hydraulic conductivity curves were obtained using Wind's evaporation method. At a constant water pressure head, gravimetric water content increased with increasing straw content. The relationship between water pressure and volumetric water content did not differ significantly between the treatments. An additive model based on the sum of the water retention of straw and soil measured separately gave a good estimation of the water retention measured in the mixture. Hydraulic conductivity decreased with increasing straw content for the same water pressure head. Tomographic images showed that mixing straw into the soil created new pores in the samples. Results from simulations of straw decomposition indicated that (i) the uptake of water by straw has to be taken into account when calculating how much water should be added gravimetrically in an incubation experiment and (ii) changes in hydraulic conductivity due to the presence of straw can have an impact on water and C dynamics.