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Abstract Climate change has increased the likelihood of extreme events, increasing the number of days with dangerous fire weather conditions, resulting in fires with increased severity, frequency and extent. This can greatly impact vegetation communities by reducing diversity and slowing recovery. The role of in situ soil seed banks in mediating impacts of shifting fire regimes is often unclear and may vary between different vegetation types. In particular, the impact of high fire severity, an increasingly common fire regime shift, may increase the likelihood of temperatures lethal to seeds in the soil, while higher fire frequencies may reduce diversity via increased immaturity risk. Here we aim to assess how fire severity impacts the species' and functional group diversity of soil seed banks in a threatened mesic forest community. We collected 396 soil samples from 12 sites within wet sclerophyll forest in the Blue Mountains of New South Wales, Australia that had been burnt during the 2019/2020 Australian megafires at differing fire severities (moderate, high and extreme), as well as from unburnt (control) sites, 3 years post‐fire. Soil samples were split into the leaf litter and soil, both treated with smoke and heat to break fire‐related dormancy, and regularly watered in a greenhouse to observe germination for a year. This was compared to floristic surveys conducted at each site. Our data showed a hump‐shaped relationship between species richness and fire severity in the extant vegetation. The lowest richness occurred at unburnt sites peaking at moderate severity burn sites and declining slightly at high and then extreme severity sites. This relationship was not significant in the soil seed bank, indicating it may buffer against losses in diversity long term. Obligate resprouters generally declined as severity increased. A distinct difference in composition between extant vegetation and in the soil seed bank emphasises that a significant portion of the species richness within these communities solely exists in the soil seed bank, fluctuating as environmental conditions change. Composition in both extant vegetation and the soil seed bank shifted with increasing fire severity, suggesting potential impacts on the future functioning of these ecosystems. Read the free Plain Language Summary for this article on the Journal blog.