The importance of nursery practices for seedling mycorrhization and field performance was investigated under nursery and field conditions on nutrient-deficient land in a reclamation area in Iceland. Containerized downy birch (Betula pubescens Ehrh.) seedlings were grown with or without ectomycorrhizal inoculum in two potting substrates (commercial Sphagnum peat moss and local sedge peat). Seedlings were, furthermore, subjected to two fertilizer regimes: constant nutrient strength and initially dilute but escalating nutrient strength. In the nursery, seedlings in Sphagnum peat moss fed with constant nutrient strength grew better than plants in other treatments. Sedge peat, escalating nutrient strength and inoculum was the only treatment combination that provided conditions for prolific mycorrhization in the nursery. In the field, seedlings subjected to mycorrhizal inoculation and/or escalating nutrient strength survived better and had less shoot dieback than seedlings of contrasting treatments. Furthermore, seedlings raised in sedge peat substrate grew better in the field than seedlings raised in Sphagnum peat moss. Seedling mycorrhization at planting correlated positively with seedling field survival and growth and negatively with shoot dieback. The results illustrate that biological and chemical substrate conditions in the nursery can be decisive for the mycorrhizal development and field performance of tree seedlings.