Many parts of the Ethiopian highlands have a problem of acidity which causes the gradual reduction of soil fertility and crop productivity. There has been no research done on the effect of vermicompost (VC) individually or combined with lime and inorganic fertilizers in ameliorating the acidic soils of the country. Hence, the objective of the present study was to characterize the physicochemical properties of VC prepared from different feedstock and to evaluate the effect of VC on selected properties of acidic soil of the site. The study was conducted during 2021 at Yeferzeye kebele and cow manure (CM), enset leaf (EL), potato peels (PP), and paper waste (PW) were utilized to prepare the VC from earthworms (Eisenia fetida). A two-month incubation experiment was also conducted in the green house with four different VC rates (0, 2.5, 5 and 7.5 t ha-1). The highest value of organic carbon (21.44%) and total nitrogen (3.04%) were found in the CM whereas the highest total phosphorus (2794.8 mg kg-1 VC) was recorded from vermicompost made from PW. VC produced from PP substrates had the greatest available Potassium (7286.67 mg kg-1 VC). The highest VC rate (7.5 t ha-1) elevated the pH of the PW from 4.94 to 5.48. Similarly, the highest content of OM (3.2%) was produced in EL, (3.21%) in PP and (3.25%) in PW at the highest rate. The highest increase in total N (0.25%) was also recorded in EL at the highest rate and the lowest was recorded (0.18%) in CM and EL at the control. The available P of the soil varied from 1.78–24.33 mg kg−1 after incubation. The highest available K (1360 mg kg-1) was obtained when the rate of 7.5 t ha−1 were applied with PP compared to the control. Hence, the findings showed that applying VC to the acidic soil can improve soil fertility and increase crop nutrient availability.