The soil seed bank present in forests serves as a crucial indicator of soil resilience following disturbances. The objective of this study was to investigate the composition, density, and vertical distribution of the soil seed bank in the Diga District of Western Ethiopia across four land use types: forestland, grassland, bare land, and shrubland. Soil samples were collected from plots measuring 225 square centimeters with a depth of 9 cm. A total of 108 soil samples were collected, representing the four land use types. Each plot was sampled at three different soil layers: 0–3 cm, 3–6 cm, and 6–9 cm depths. From the soil seed bank, 51 plant species were identified, with 46 (90.2%) being herbs, 3 (5.88%) trees, and 2 (3.92%) shrubs. The Asteraceae (13.30%), Poaceae (11.53%), and Fabaceae (9.61%) families exhibited the highest species composition, accounting for 38.44% of the total. Species richness varied significantly across all land use types and soil layers (p<0.05), with shrubland having the highest species richness and bare land having the lowest count. The total seed bank density in the soil across all plots was 92153 seeds/m2, with the highest density observed in the top 3 cm of the soil layer. The first and second soil layers exhibited a high Jaccard similarity coefficient of 0.76. Forestland and shrubland displayed the highest Jaccard coefficient of similarity (0.72), while the lowest was observed between bare land and shrubland (0.43). There was greater species similarity between the first and second soil layers (0.76) and lower similarity between the middle and bottom layers (0.32). The study found limited similarity between aboveground vegetation and the soil seed bank due to the low regeneration of woody species. Forestland and shrubland exhibited a high Jaccard similarity coefficient to aboveground vegetation, while grassland had the lowest similarity coefficient. Based on the findings, it can be concluded that the shrubland land use types had high soil seed bank composition and density. Therefore, the conservation of shrubs in the Arjo-Diga Forest should be considered for the restoration of degraded areas, taking into account the soil seed bank in the shrubland ecosystem.