Abstract: The effects of inclusion characteristics, such as type, size distribution and volume fraction on the formation of intra-granular acicular ferrite (IAF) in steels containing rare earth (RE) elements were investigated by optical microscopy, scanning electron microscopy and the point counting method, It is shown that the type and volume fraction of inclusions both play a critical role in IAF formation. A low mismatch value of 1.9% between ferrite and RE-oxides (including RE-oxysulfide) decreases the energy barrier on the inclusion surface for IAF nucleation and accelerates the nucleation on RE oxides. But RE-sulfides which have a high mismatch value of 42.5% with ferrite cannot induce IAF. The volume fraction of IAF increases with the volume fraction of inclusions increasing. When the volume fraction of inclusions reaches 9.5×10^-4, the volume fraction of IAF is 53%.