The invention discloses organic fertilizer for loosening soil and retaining water. The organic fertilizer is prepared from the following components in parts by mass: 30 to 40 parts of peat soil, 10 to15 parts of sludge, 10 to 15 parts of weathered coal, 0.1 to 5 parts of lignin, 5 to 10 parts of clay, 0.5 to 1 part of borax, 1 to 3 parts of magnesium sulfate, 0.5 to 1 part of zinc sulfate, 0.5 to1 part of ferrous sulfate, 20 to 40 parts of limestone powder , 0.5 to 1 part of a soil water-holding agent, 0.05 to 0.1 part of a compound microbial agent, 0.05 to 0.1 part of yeast and 0.5 to 1 part of biological enzyme. According to the organic fertilizer for loosening the soil and retaining the water, disclosed by the invention, under the triple action of organic matters, a water-retaining agent and yeast enzyme, the fertilizer has the advantages that the granular structure of the soil can be effectively improved, moisture and temperature of the soil are kept, transformation of soil nutrients and absorption of plant nutrients are promoted and buffering performance of the soil is improved. In addition, the organic fertilizer disclosed by the invention has good retention property; the organic fertilizer has the effect of combining a macroscopic physical structure and a microscopic root system environment as well as quick and durable evident effects after being used.