Most tree nurseries in Ethiopia overemphasize mass seedling production to the expense of seedling quality. The study aimed at evaluating nursery characteristics and tree seed procurement approaches, and how these influenced seedling quality in eight purposively selected Woredas of Oromia region. A total of 169 respondents from government and non-government organizations, farmer nursery owners and development/extension agents and officers were interviewed. Seed quality was explored through assessing the seed supply sources, the type of seed source and mother tree selection, and the practices in seed physiological quality assessments. Our results revealed that over half (62.5%) of the nurseries were government owned, while 20% were NGO-run nurseries and the remaining 17.5% were owned by farmers. Nine challenges constraining tree seedling production and leading to underperformance were identified, with the two major problems shared by all nursery types being lack of sufficient material and germplasm input and using seeds of low or unknown quality. Informal seed dealers were the main source of seeds (87.6%) for all the nursery types. On the other hand, nursery operator's own seed collection was from any free-standing trees either planted or retained as these sources were easily accessible. Seeds were, on average, collected from few mother trees, implying a high probability of sourcing seeds of narrow genetic diversity. Analysis of variance revealed statistically significant differences in seedling germination among the different seed procurement approaches within the same seed type. The seeds obtained from formal seed dealers had the highest germination rates in both hard-coated (87.3%) and soft-coated (79.7%) seeds. Our findings suggest that there is need to improve the seed procurement and the seedling supply system through quality assurance of the seeds used in seedling production.