Nitrogen-fixing tree species play important roles in restoration and improvement in the degraded soils and forests. However, understanding the mechanism of nitrogen-fixing tree species underlying the degraded soil and forest restoration and reconstruction has still poorly known. Alnus nepalensis, a typical and native nitrogen-fixing tree species in the southwest of China, is widely used in plantations for maintaining or restoring soil fertility. In this study, we conducted a paired experiment to explore the effects of A. nepalensis on severely degraded soil amelioration and understory development by comparative analysis of soil nutrients, the growth and species diversity of understory vegetation in the plantations with different patterns of tree species mixture, different age-structure, and the plantation and natural forest. The results showed that:(1) the soil nutrients were significantly improved after planting A. nepalensis. Integrated Fertility Index (IFI) was significantly higher in the plots of A. nepalensis plantations (AP) than that of the mixed plantations (MP) and Pinus yunnanensis plantations (PP) (P<0.05). (2) IFI, organic matter (OM), and total nitrogen (TN) were significantly higher in the 8-year A. nepalensis plantations than that of the 5-year (P<0.05). (3) IFI, OM, and TN all showed the similar sequence, i.e., A. nepalensis forest>mixed forest>P. yunnanensis forest (P<0.05). The structural equation model (SEM) showed that there was a significantly positive correlation between soil nutrients properties and total volume of A. nepalensis (ATV). (4) According to the SEM, the ATV was positively correlated with the soil fertility (R=0.473, P<0.001). (5) In the plantations with different patterns of tree species mixture and in the natural forests with different dominant trees, the shrub growth was increased with the increasing of ATV (R=0.496, P=0.014; R=0.610, P=0.002), and the growth index of shrub were significantly positively correlated with OM, TN, and IFI (P<0.05). Overall, A. nepalensis demonstrated positive driving effects on ecological restoration of the degraded soils and understory growth in the upper reaches of the Jinsha River, China.