To reduce the inhibiting effects of polystyrene-based emulsion on the hydration process and strength development of cementitious materials, an amphiphilic diblock copolymer polystyrene-block-poly(acrylic acid) (PS-b-PAA) was synthesized via reversible addition-fragmentation chain transfer (RAFT) polymerization and demonstrated in cement paste system for improving the resistance to water absorption without significantly reducing 28-day compressive strength. Firstly, the dissolved PS-b-PAA was added into water, and it quickly self-assembled into amphiphilic 80 nm-sized micelles with hydrophobic polystyrene-based core and hydrophilic poly(acrylic acid)-based shell. The improved dispersion compared to that of polystyrene emulsion may minimize the inhibiting effects on strength development, as the effects of PS-b-PAA micelle as hydrophobic admixtures on rheological properties, compressive strength, water absorption, hydration process, and pore structure of 28-day cement pastes were subsequently investigated. In comparison with the control sample, the saturated water absorption amount of cement pastes with 0.4% PS-b-PAA was reduced by 20%, and the 28-day compressive strength was merely reduced by 2.5%. Besides, the significantly increased hydrophobicity instead of slightly decreased porosity of cement paste with PS-b-PAA may contribute more to the reduced water adsorption characteristics. The study based on prepared PS-b-PAA micelle suggested a promising alternative strategy for fabricating polystyrene-modified concrete with reduced water absorption and unaffected compressive strength.