Biological soil crust (BSC) plays a very important role in the terrestrial ecosystems, especially in the dryland ecosystems, where BSC occupies open ground among seed plant patches. Thus, the development of BSC must be an important factor that influences the seed plant recruitment process and vegetation spatial distribution pattern. However, in the present studies, there are lots of debates about the effect of BSC on seed dispersal and germination, seedling emergence and establishment. The reason for these arguments is that the effects of BSC on seed plants depend upon comprehensive impact of multiple factors, such as different climatic conditions, soil types, species compositions of BSC, species compositions of seed plants and the different combinations of these factors. In order to well understand the research progress on the effect of BSC on seed germination and seedling establishment, we searched the literatures about the relationships among BSC and seed dispersal, germination, seedling emergence, establishment. The related literatures published both in English and Chinese were searched. We reviewed the influence of the surface micromorphology caused by BSC on seed dispersal; the effect of soil characteristics (physical, chemical and biological) changed by BSC on seed germination, seedling emergence, survival and establishment; the mechanism of the influence of BSC on seed dispersal, seed germination and seedling establishment, based on the seed shape characteristics, seed germination and seedling establishment traits. The potential reasons for contradictory experimental results were analyzed. In generally, to conduct in-depth research, multidisciplinary experimental approaches should be used. The microscopic studies such as molecular biology, plant physiology, biochemistry and the macro & medium scale studies such as remote sensing, field ecological factor process monitoring, controlled experiments should be combinatively used to study the mechanism and process about the BSC influence on the seed dispersal, germination and seedling establishment. At the same time, under the background of global climate change and frequent occurrence of disturbance, it is better to introduce simulation and prediction methods in related study fields such as hydrological model, climate model, population dynamic model and others to predict procedural effects of BSC on seed dispersal, seed germination and seedling establishment. And then, this novel study approaches would promote the study on the relationship between BSC and seed plants, and deepen the understanding of the law of vegetation development in arid fragile ecosystems.