Understory herbs and soil invertebrates play key roles in soil formation and nutrient cycling in forests. Studies suggest that diversity in the canopy and in the understory are positively associated, but these studies often confound the effects of tree species diversity with those of tree species identity and abiotic conditions. We combined extensive field sampling with structural equation modeling to evaluate the simultaneous effects of tree diversity on the species diversity of understory herbs, beetles, and earthworms. The diversity of earthworms and saproxylic beetles was directly and positively associated with tree diversity, presumably because species of both these taxa specialize on certain species of trees. Tree identity also strongly affected diversity in the understory, especially for herbs, likely as a result of interspecific differences in canopy light transmittance or litter decomposition rates. Our results suggest that changes in forest management will disproportionately affect certain understory taxa. For instance, changes in canopy diversity will affect the diversity of earthworms and saproxylic beetles more than changes in tree species composition, whereas the converse would be expected for understory herbs and detritivorous beetles. We conclude that the effects of tree diversity on understory taxa can vary from positive to negative and may affect biogeochemical cycling in temperate forests. Thus, maintaining high diversity in temperate forests can promote the diversity of multiple taxa in the understory.