Use of saline water for irrigation is essential to mitigate increasing agricultural water demands in arid and semi-arid regions. The objective of this study is to address the potential of using straw biochar as a soil amendment to promote wheat production under saline water irrigation. A field experiment was conducted in a clay loam soil from eastern China during 2016/2017 and 2017/2018 winter wheat season. There were five treatments: freshwater irrigation (0.3 dS m−1), saline water irrigation (10 dS m−1), saline water irrigation (10 dS m−1) combined with biochar of 10, 20, 30 t ha−1. Saline water irrigation alone caused soil salinization and decreased wheat growth and yield. The incorporation of biochar decreased soil bulk density by 5.5%–11.6% and increased permeability by 35.4%–49.5%, and improved soil nutrient status. Biochar also reduced soil sodium adsorption ratio by 25.7%–32.6% under saline water irrigation. Furthermore, biochar alleviated salt stress by maintaining higher leaf relative water content and lower Na+/K+ ratio, and further enhanced photosynthesis and relieved leaf senescence during reproductive stages, leading to better grain formation. Compared to saline water irrigation alone, biochar application of 10 and 20 t ha−1 significantly increased wheat grain yield by 8.6 and 8.4%, respectively. High dose of biochar might increase soil salinity and limit N availability. In the study, biochar amendment at 10 t ha−1 would be a proper practice at least over two years to facilitate saline water irrigation for wheat production. Long-term studies are recommended to advance the understanding of the sustainable use of straw biochar.