Silica gel‐modified hydratable magnesium carboxylate (HMC) is used as the binder for refractory castables. The mechanical strength and thermal shock resistance of HMC bonded and silica gel‐modified HMC‐bonded castables were compared. When the HMC/silica gel mass ratio is 2, the cold modulus of rupture, the hot modulus of rupture, the residual strength ratio after three‐times water quenching tests, and the matrix‐specific fracture energy of the castables were increased by 300%, 124%, 44.7%, and 132%, respectively, compared with HMC‐bonded castables. The characterization of microstructure evolution of silica gel‐modified HMC‐bonded castables indicated that a small amount of liquid phase generated is conducive to improving the high‐temperature mechanical properties. The in situ alumina‐rich spinel and needle‐like mullite toughened the matrix and enhanced the thermal shock resistance of the castables by “microcrack generation” and “preventing crack propagation” mechanisms.