Abstract: Under climate change, clay soils are increasingly subjected to wetting–drying cycles, which promote surface cracking and erosion-induced instability. To improve soil stability under alternating wetting–drying conditions using environmentally sustainable materials, clay was treated with hydrogel biopolymer (HBG) and palm fiber (PF). Single HBG stabilization and HBG–PF composite stabilization schemes were investigated through wetting–drying cycle tests, rainfall erosion tests, and scanning electron microscopy (SEM) analyses to systematically examine crack evolution, erosion resistance, and microstructural characteristics. The results indicate that HBG effectively suppresses crack development and enhances erosion resistance, while the incorporation of PF further improves the stabilization performance, with the 0.3% HBG–0.6% PF mixture exhibiting the best overall performance. The study elucidates the synergistic interaction between HBG and PF. The combined effects of biopolymer bonding and fiber reinforcement contribute to enhanced structural stability of the treated soil. These findings provide a theoretical basis for ecological slope protection and sustainable soil improvement in regions frequently subjected to wetting–drying cycles.