Alfalfa (Medicago sativa L.) production is constrained mainly by water deficit and poor soil fertility in the Loess Plateau in China. Ridge-furrow rainwater harvesting with biochar application could improve soil hydrothermal properties, soil nutrients, alfalfa fodder yield, and maintain sustainable agricultural production. A consecutive 4-year field experiment in a randomized block design was conducted to (1) investigate the runoff coefficient for ridges compacted with three biochar application rates (0, 30, and 60 t ha−1) with three ridge widths (30, 45, and 60 cm); and (2) investigate the effects of ridges compacted with three biochar application rates with three ridge widths on soil hydrothermal condition, nutrient, fodder yield, and water use efficiency (WUE) of alfalfa with flat planting without biochar application (FP) as a control. The runoff coefficient for MCS30, MCS45, MCS60, SMB30, SMB45, SMB60, DMB30, DMB45, and DMB60 (MCS, SMB, and DMB were ridges compacted with soil-biochar mixture at biochar application rate of 0, 30, and 60 t ha−1, respectively. Subscript numbers 30, 45, and 60 referred to ridge widths) was 29.8%, 31.4%, 33.3%, 25.3%, 28.7%, 30.0%, 24.5%, 27.1%, and 28.9%, respectively, over 4 years. Ridge-furrow rainwater harvesting had higher soil water storage and soil nutrients compared to FP. Compared to ridges compacted with soil-biochar mixture at biochar application rate of 0 t ha−1, ridges compacted with soil-biochar mixture at biochar application rate of 30 and 60 t ha−1 had lower runoff coefficient and soil water storage, while higher soil nutrients, especially soil total nitrogen (22.8–79.8%) and available phosphorus (36.7–84.6%), led to high fodder yield and WUE of alfalfa. As ridge width increased, soil moisture and nutrients increased, while fodder yield and water use efficiency decreased. As biochar application rate increased, soil nutrients increased, soil moisture and net profit decreased. As biochar application rate was 30 t ha−1, fodder yield and WUE of alfalfa reached a peak. Compared to FP, fodder yield for MCS30, MCS45, MCS60, SMB30, SMB45, SMB60, DMB30, DMB45, and DMB60 increased by 11.5%, 8.2%, 6.5%, 31.4%, 25.7%, 12.0%, 20.4%, 18.3%, and 2.5%, respectively, over 4 years, while WUE for the same treatments increased by 2.9, 3.1, 3.2, 5.8, 5.4, 3.6, 3.6, 4.1, and 2.0 kg ha−1 mm−1. Biochar application rate of 30 t ha−1 with 30 cm ridge width was found to be an appropriate and feasible technology in ridge-furrow rainwater harvesting.