The density of seeds in soil seed banks and the species composition of both seed banks and aboveground vegetation were examined in naturally restored sites (NRS) and aerially seeded sites (ASS) in the Hunshandak sandlands of northern China. Five sites were naturally restored 1, 2, 4, 8, and 15 years ago and four sites were aerially seeded 1, 2, 5, and 7 years ago. In total, 36 species were recorded in the seed bank and 41 species in the aboveground vegetation for all NRS, whereas the numbers were 17 and 19, respectively, for ASS, indicating that the NRS can support higher diversity of species than the ASS. During the initial 2 years of restoration, introduced alien shrubs by aerial seeding dominated the vegetation of ASS, although there were indigenous pioneer species in the seed bank which failed to establish in the community. In contrast, indigenous species were dominant components in both the seed bank and the vegetation at the NRS. These findings suggest that the establishment of introduced species might have restricted the germination of certain indigenous pioneer species. Seed bank density of NRS significantly increased with time from 459 ± 76 seeds m−2 at NRS2 to 3,351 ± 694 seeds m−2 at NRS15, showing that the seed bank in degraded grassland is large enough to allow natural restoration. It is not always necessary to actively introduce seeds to enhance vegetation diversity.