This study evaluated the effect of water content in the substrate during pre- and post-grafting period on the survival rate and quality of tomato plug seedlings. Nine combinations of three water levels (high, medium, and low) were set up in the substrate of both scion and rootstock. The water content in the substrate of the scion did not affect the survival rate of grafted tomato seedlings, while the survival rate was statically different among the various water contents in the substrate of the rootstock. The maximum survival rates (100%) were observed in seedlings treated with high water levels in the substrate of the rootstock, and the survival rates declined with decreasing water content in the rootstock substrate. The growth characteristics were not significantly affected by different water content in the scion substrate, while they were statically different among the seedlings treated with various water contents in the rootstock substrate. The growth characteristics decreased with decreasing water content in the rootstock substrate. The highest value of compactness was observed in grafted seedlings, which combined medium water level in the scion and high water level in the rootstock substrate treatment. The root morphology of tomato seedlings was also affected by water content in the rootstock substrate. The total root surface area, total root length, and number of root tips decreased with deceasing water content in the rootstock substrate.