Seedlings are rejected every year in forest nurseries because of insufficient root development and root plug cohesion. Adequate substrate bulk density and aeration properties are of critical importance for root growth and water and nutrient uptake. The quality norms for nursery substrates, based in part on the ratio of coarse to fine particle sizes, have recently been questioned with respect to substrate performance. We conducted experiments in 2008 and 2009 under commercial nursery conditions to determine the effects of substrate physicochemical properties on seedling growth and nutrition. Seedlings were grown in 13 different substrates composed of coarse and fine peat particles (threshold size: 0.5 mm), perlite, and vermiculite, covering a broad range of physical properties with adequate available water and various coarse/fine particle ratios and aeration properties. Substrate properties had significant effects on growth parameters in both years. Seedling growth was affected by water stress in 2008 and low gas diffusivity in 2009. This study emphasizes the importance of management on substrate performance, indicating that short periods of moderate water stress (matric potential lower than −10 kPa) may hinder seedling growth. It also suggests that when irrigated substrates are maintained within the 0 to −5 kPa matric potential range, gas diffusivity should not be lower than 0.003 to 0.005 cm2 s cm−2 s−1, in agreement with the modeled O2 profiles in root plugs. Hence, when designing and using substrates at the nursery scale, more attention should be paid to aeration properties after potting and to the management rather than to the coarse/fine particle ratio.