Eucalyptus forest plantations are normally devoid of understory vegetation that is often assumed to be associated with Eucalyptus allelopathic effects. The objective of this study was to determine the influence of high soil compaction and low soil moisture content on inhibition of the germination of understory seeds in Eucalyptus forests and thus would result in the scarcity of understory vegetation. The soil water content above the depth of 1 m of six major understory vegetation types was analyzed to determine if there was a correlation between soil water content and understory vegetation. The effects of soil treatment (soil-loosening vs. no soil-loosening) and water supply amount (2500, 2000, 1500, 1000, 500, 250, or 0 ml of water per day) on the seed germination rate of Stylosanthes sp. were explored using an artificial climate chamber experiment. Influence of soil source (five Eucalyptus forest soils vs. two non-Eucalyptus forest soils) and water supply (0, 50, 150, 200, or 400 ml of water every day) on the germination rate of five types of seed were assessed using a three-factor analysis of variance (ANOVA). Soil-loosening and water supply significantly (P < 0.05) increased seed germination rate with the contribution rates of 26.14 and 42.93 %, respectively. Analysis of variance for three-factor experiments revealed a significant (P < 0.05) effect of water supply and vegetation seed type on the germination rate of plant seeds. No significant effect of soil type was observed on germination rate, indicating that germination rate was not affected by soils in Eucalyptus forest. The conservation of soil characteristics, such as water content and compaction, during the development of a Eucalyptus forest plantation may be an effective strategy for encouraging the growth of understory vegetation. This study highlights the importance that in dry areas or areas prone to long-term drought, it would be preferable to retain native vegetation.