Abstract: The history of research and production, classification, characteristics and functional mechanism of water retaining agent were elaborated, and its influence on the soil and application in forestry were reviewed. Water retaining agent was an absorbing water polymer whose multiplying power was high and property of holding water was good. Water retaining agent could raise the soil water content, restrain water evaporation in the soil and improve the structure of soil, as well as enhance the absorption of nutrient in the soil. In forestry water retaining agent was mixed with soil, seeds, roots and culture medium. Water retaining agent could advance germination of seeds, improve emergence of seedlings and survival rate of trees, promote the growth of plants, and lengthen the withering time of plants. There was a wide range of application of water retaining agent in the afforestation in drought areas.