The restoration and reconstruction of desertified grassland has been continually initiated by the central government of China since 1995, and the ecological benefits of grassland restoration gained attention both home and abroad. In particular, the water conservation function of grassland is regarded as the primary indicator of the ecosystem's restoration and is one of the most important grassland ecosystem services. Changes in water conservation are related to the water cycle and global climate change. The present study investigates the moisture and physicochemical properties of desertified grassland soil over several years (managed sample plot in 1995, 2007, 2009, 2010, and 2011; non-managed sample plot in 2012; and normal grazing area in 2012) in Zoigê County, using both field investigation and experiments to analyze the dynamics of water conservation and its determinants. During the recovery process, 1) Soil texture had changed that tight sandy soil was gradually converted to sandy loam, water conservation and fertilizer preservation capacity were increased, and bulk soil density decreased from 1.7 g/cm³ in the non-managed area to 1.3 g/cm³ in the normal grazing area. 2) Soil pH value decreased from 7.6 to 6.7 with the duration of management, and according to the classification of soil pH, the soil was neutral soil which was suitable for vegetation growth. Meanwhile, soil organic matter of the treatment areas was far lower than that of the normal grazing area, although the organic matter exhibited an upward trend. 3) Soil moisture exhibited a V-shaped trend that the content decreased in the early stage of management and the content of managed area in 2009 was lowest for only 6.8%. But in the late stage of management, the content increased from 6.8% to 12.1% in the managed area in 1995, in which the grassland had been restored and water conservation got improvement. 4) Correlation analysis indicated that soil moisture was significantly correlated with organic matter content, soil texture, pH, biomass, and soil carbon content, although the relationship between soil moisture and pH was negative. 5) As the duration of treatment increased, the soil degradation index decreased, and the soil conditions improved greatly.