The working mechanism of methyl hydroxyethyl cellulose, MHEC (M_w = 2.5 · 10⁵ g/mol, DS_methyl = 1.81, MS_hydroxyethyl = 0.15) as water retention agent in cement was investigated. First, the hydrocolloid was characterized and its performance as non-ionic water retention agent was determined employing the filter paper test. Also, water sorption and swelling of individual MHEC fibers under conditions of different humidities were monitored by ESEM imaging. Second, its working mechanism was established. It was found that at low dosages, MHEC achieves water retention by intramolecular sorption of water and concomitant swelling while at higher dosages, MHEC molecules agglomerate into large hydrocolloidal microgel particles (d > 1 μm) which effectively plug the pores in the mortar matrix. MHEC association was evidenced by an exponential increase in solution viscosity as concentration rises, a strong increase in the hydrodynamic diameter of solved MHEC molecules, and a noticeable reduction of surface tension.