To produce a firm and cohesive root plug to promote automated transplanting of nursery-grown seedlings, hydrolyzed soy protein-modified urea–formaldehyde (H-UF) resins were used to bind renewable substrate [mixture of coconut (Cocos nucifera) coir dust, coconut fiber, organic manure, perlite, vermiculite]. The resulting substrate block showed high density and nutrient concentrations in the peripheral portion and relatively low density and nutrient levels in the center. The porosity of the H-UF/substrate block was slightly lower than that of standard substrate. The electrical conductivity and pH were beneficial for germination and early seedling development. The modified resins in the substrate block existed in the form of spheres that adhered to each other and formed a porous structure from nano- to micrometer scale. In particular, the H-UF/substrate block increased the seedling height, stem diameter, root length, and leaf area of ‘Sujiao No. 5’ pepper (Capsicum annum) seedlings by 56.07%, 43.33%, 1.33%, and 89.63%, respectively, compared with those of seedlings grown in substrate without H-UF resin. The contents of nitrogen, phosphorus, and potassium in the shoot and root of pepper seedlings grown in H-UF/substrate blocks were enhanced by 39% to 69% compared with those of seedlings grown in standard substrate. The compressive strength of the H-UF/substrate block was 3.6-fold higher than that of substrate when 50% resin was added to the substrate. The results indicated that a combination of the substrate with the modified resin was suitable as a growth substrate for nursery production of pepper seedling plugs.