The effect of litter on seedling establishment can influence species richness in plant communities. The effect of litter depends on amount, and also on litter type, but relatively little is known about the species-specific effects of litter. We conducted a factorial greenhouse experiment to examine the effect of litter type, using two woody species that commonly co-occur in boreonemoral forest—evergreen spruce (Picea abies), deciduous hazel (Corylus avellana), and a mixture of the two species—and litter amount—shallow (4 mm), deep (12 mm) and leachate—on seedling emergence and biomass of three understorey species. The effect of litter amount on seedling emergence was highly dependent on litter type; while spruce needle litter had a significant negative effect that increased with depth, seedling emergence in the presence of hazel broadleaf litter did not differ from control pots containing no litter. Mixed litter of both species also had a negative effect on seedling emergence that was intermediate compared to the single-species treatments. Spruce litter had a marginally positive (shallow) or neutral effect (deep) on seedling biomass, while hazel and mixed litter treatments had significant positive effects on biomass that increased with depth. We found non-additive effects of litter mixtures on seedling biomass indicating that high quality hazel litter can reduce the negative effects of spruce. Hazel litter does not inhibit seedling emergence; it increases seedling growth, and creates better conditions for seedling growth in mixtures by reducing the suppressive effect of spruce litter, having a positive effect on understorey species richness.