Physical damage is one of the main factors that cause seedling mortality in many ecosystems. However, the impact of physical damage due to rainfall erosion on seedling mortality is seldom investigated. In this study, we ask the following question: how does rainfall erosion influence seedling damage and establishment in the Loess Plateau region of China? Seedling damage and establishment experiments under different patterns of simulated rainfall were conducted. The seedling damage rate, damage type and growth status were investigated. The seedling damage rate was influenced by rainfall intensity and duration and by the runoff volume. The mean damage rate of all three studied species did not exceed 15 per cent, and the highest damage rate of individual species under special rainfall events was approximately 30 per cent. The type of damage suffered by the seedlings of Sophora viciifolia (which produces large seeds) mainly took the form of striking down, whereas seedlings of Artemisia scoparia (which produces small seeds) suffered the highest rates of washing away among the three studied species. In the seedling establishment experiment, after 120 days with six rainfall events, S. viciifolia had the highest seedling establishment rate (80·1 ± 2·5 per cent), followed by Bothriochloa ischaemun (67·2 ± 2·2 per cent), and A. scoparia (28·1 ± 2·5 per cent). The seedling damage rate, damage type and establishment rate were also related to seed size. Whether physical damage to seedlings is a major factor limiting vegetation restoration in eroded environments requires further research. Copyright © 2012 John Wiley & Sons, Ltd.