Vermicomposting has recently been shown to be an efficient recycling technology that would improve the quality of the final product by stimulating the microbial community. However, the efficacy of vermicomposting process, as well as the microbial biomass and community structure during this bioconversion process, depend on earthworm species and type of substrate ingested. Therefore, this study investigated the potential of native (Eudrilus eugeniae) and exotic (Eisenia fetida and Eisenia andrei) earthworms in Ethiopia on nutrient transformation and microbial dynamics and enzymatic activity during vermicomposting of substrates from mixed agricultural wastes. Earthworm inoculation transformed the wastes into a nutrient-rich humified vermicompost with a significant reduction in pH, TOC and C:N ratios (twofold reduction compared to non-composted substrates). An increase in worm growth and cocoon production were shown in substrates of cow manure mixed with soybean and banana residues (CM + SB) after gut transit through Eudrilus eugeniae and Eisenia fetida. Cow manure mixed with maize and soybean residues (CM + MS) were found suitable for Eisenia andrei. The same substrate and earthworm species resulted in the highest nutrient concentrations (N, P, K, and S) and higher C loss (up to 77% of the initial C) with lower N loss (<9%) compared to non-composted substrates. A considerable increase in microbial biomass, β-glucosidase and dehydrogenase activity (two times more than control) was obtained in substrates of CM + SB using Eudrilus eugeniae. The PLFA analysis indicated that earthworms increased Gram-positive and Gram-negative bacteria, actinomycetes, AMF, fungi18:1, and protozoan population, while they reduced fungal community (fungi18:2 and fungi18:3) compared to uninoculated control. In conclusion, vermicomposting earthworms could potentially valorize substrates from agricultural wastes into nutrient-rich and microbially improved vermicomposts.