Abstract: Vermicompost has been proved to have a beneficial effect on vegetable seedling development by many previous studies and can be used as a potential substitute for peat in nursery substrate production. An experiment was conducted to study the effects of high-temperature sterilization and materials addition of vermicompost-formulated substrate on the contents of biologically active substances and capsicum seedling development, and thus to provide a scientific basis for industrial production and effectiveness evaluation of vermicompost-formulated substrate. The vermicompost, obtained through earthworm digestion of cow manure, was sterilized with high-temperature (120℃) and used to formulate nursery substrate with the addition of vermiculite and urea, the growth parameters of capsicum seedlings and the contents of biologically active substances (e.g. GA3 and IAA) in the substrate were measured under greenhouse and laboratory conditions. The results show that the GA3 content in vermicompost under the high temperature sterilization is increased, and the active organic matters are degraded into derivatives which have the similar atomic group and are more polarized and water soluble. The vermicompostformulated substrate and the high-temperature sterilization processing improve many growth parameters of capsicum seedlings including stem diameter, plant height, leaf expansion, number of leaves, root diameter, root length, root surface area, root volume, number of root tips, fresh/dry weight and strong seedling index, and reduce the chlorophyll content of capsicum seedlings. Based the data obtained in this study, the optimized formulation of nursery substrate for capsicum seedling development is: high-temperature sterilized vermicompost + vermiculite (4 vermicompost∶1 vermiculite, v∶v) + urea (0.50 kg/m3).