To investigate the impact of kitchen waste compost on the formulation of rice seedling substrate, this study employed indoor seedling tray nursery methods. Six formulations, incorporating kitchen waste compost, peat, and vermiculite as raw materials, were prepared based on volume-specific gravity. The physicochemical characteristics of each seedling substrate were analyzed to assess their influence on rice seedling growth, considering the cost implications of synthesizing different formulations. The findings revealed a significant alteration in both the physicochemical parameters of the seedling substrate and the growth indexes of rice seedlings as the substitution of peat by kitchen waste compost increased. The formulation denoted as WF1 exhibited physicochemical parameters and growth indexes aligning with all applicable standards. Notably, key physicochemical indicators, including pH, electrical conductivity (EC), unit weight, and aeration porosity, increased gradually with the rising proportion of kitchen waste compost. Conversely, growth indicators such as seedling emergence rate, plant height, and stem thickness exhibited a gradual decline. The concentration of malondialdehyde (MDA) and antioxidant enzyme activities in rice seedling roots indicated that an increased presence of kitchen waste compost imposed significant stress on rice seedling growth. From a formulation cost perspective, integrating kitchen waste compost into the rice seedling substrate effectively reduced costs. The WF1 treatment demonstrated a 9.53% reduction in formulation cost compared to the CK treatment. The optimal formulation, consisting of 10% kitchen waste compost, 40% peat, and 50% vermiculite, was identified as better suited for the growth of rice seedlings, achieving a balance between growth performance and cost efficiency. In conclusion, incorporating kitchen waste compost in rice nursery substrate formulation can yield cost-effective solutions while maintaining acceptable growth parameters for rice seedlings.