Rain-induced erosion and short-term drought are the two factors that limit the productivity of croplands in the red soil region of subtropical China. The objective of this study was to estimate the effects of conservation practices on hydraulic properties and root-zone water dynamics of the soil. A 3-year experiment was performed on a slope at Xianning. Four treatments were evaluated for their ability to reduce soil erosion and improve soil water conditions. Compared with no practices (CK) and living grass strips (GS), the application of polyacrylamide (PAM) significantly reduced soil crust formation during intense rainfall, whereas rice straw mulching (SM) completely abolished soil crust formation. The SM and PAM treatments improved soil water-stable aggregates, with a redistribution of micro-aggregates into macro-aggregates. PAM and SM significantly increased the soil water-holding capacity. These practices mitigated the degradation of the soil saturated hydraulic conductivity (Ks) during intense rainfalls. These methods increased soil water storage but with limited effects during heavy rainfalls in the wet period. In contrast, during the dry period, SM had the highest soil water storage, followed by PAM and CK. Grass strips had the lowest soil water storage because of the water uptake during the vigorous grass growth. A slight decline in the soil moisture resulted in a significant decrease in the unsaturated hydraulic conductivity (Ku) of the topsoil. Therefore, the hydraulic conductivity in the field is governed by soil moisture, and the remaining soil moisture is more important than improving soil properties to resist short-term droughts. As a result, SM is the most effective management practice when compared with PAM and GS, although they all protect the soil hydraulic properties during wet periods. These results suggest that mulching is the best strategy for water management in erosion-threatened and drought-threatened red soils. Copyright © 2014 John Wiley & Sons, Ltd.