This research article published by Springer Nature, 2020Introduction Pastoralism and agro-pastoralism are the major modes of life in arid and semi-arid rangelands. However, rangeland quality and quantity are rapidly deteriorating due to a number of natural and human-induced factors, one of which is bush encroachment. Little is known on how bush encroachment affects the ecosystem functions and services expressed in terms of the native vegetation composition and structure, status of the soil seed bank, soil chemical and physical properties, and the abundance of mycorrhiza spores. Methods We assessed woody species in 64 plots distributed across four levels of Prosopis juliflora invasion (high, medium, low, and none) at two sites, Amibara and Gewane, in the Afar Region, Ethiopia. We collected composite soil samples to investigate the soil seed bank, mycorrhizal associations, and spore abundance. Results Plant biodiversity was generally low, with eight and four woody species in Gewane and Amibara, respectively. Prosopis juliflora was dominant in highly, moderately, and lowly invaded areas while Acacia senegal dominated the non-invaded areas. The average number of P. juliflora individuals ranged from 3/ha at non-invaded areas in Gewane to 4200/ha at highly invaded areas in Amibara while the total individual number of native woody species ranged from 0 to 88/ha at highly and lowly invaded areas, respectively. The population structure of trees/shrubs in all invasion areas showed an inverted J-shaped distribution, characterized by a high abundance of small individuals. Prosopis juliflora invasion was associated with high soil OC, Na, Ca, P, bulk density, and moisture content. Herbaceous seed numbers and species richness were highest in the moderately and highly invaded areas. All sampled tree species were associated with mycorrhiza but the percentage of root length colonization by different arbuscular mycorrhizal fungus structures varied significantly (p < 0.05) across invasion categories and sites. Conclusions Our results revealed that although P. juliflora invasion negatively impacted the availability of native woody livestock forage species, it had a positive effect on most soil physical and chemical properties. Such variable effects call out for sustainable management practices when invaded areas are restored.