The initial stage of seedling growth represents a critical period in the production of quality transplants for horticultural crops. The use of low-cost recycling materials such as compost may help improve nutrient availability and the physical conditions in the root zone. To evaluate the effect of substrates prepared with and without composted material [witness (60% peat of Sphagnum+40% perlite); mix I (45% peat of Sphagnum+30% perlite+25% composted material); mix 11 (30% peat of Sphagnum+20% perlite+50% composted material) and a commercial substrate (Sphagnum peat +40 %compost+perlite+vermiculite)] on initial nutrition of seedlings of pepper (Capsicum annuum L.), a trial was carried out fertilizing with 0, 150 and 300 mg N L-1. The transplant quality parameters height, stem basal diameter and fresh and dry weight of leaves, stems and roots, and their dry matter content were determined. The presence of compost in the substrate improved transplant quality, which was not further improved by application of mineral N. N fertilization of transplants growing on the substrates without compost improved their quality only slightly, due to the poor water and N retention of such substrates.