Abstract: The effect of Y-base rare earth on the inclusions modification, microstructure and impact toughness of E36 steel was investigated by using scanning electron microscopy and energy spectrum analysis. The results indicate that Y-base rare earth improves the microstructure and reduces the interlamellar spacing and content of pearlite. The typical cleavage fracture of E36 steel is quasi-cleavage and dimple fracture when adding Y-base rare earth. Fine and spherical rare earth inclusions are the main reason for the fracture transformation. The impact toughness of E36 steel is improved obviously by Y-base rare earth, especially at the low temperature. In comparison with E36 steel without Y-base rare earth, the longitudinal impact energy of E36 steel containing Y-base rare earth is increased by 33.5%, and the transverse impact energy is increased by 113.7% at -60℃. Moreover, the difference of longitudinal and transverse impact toughness is decreased by Y-base rare earth significantly. To E36 steel without Y-base rare earth, the proportion of longitudinal and transverse impact values is greater than 1.70 and it reaches 2.77 at -60℃. And the proportion of longitudinal and transverse impact values is 1.51-1.73 for E36 steel plate containing Y-base rare earth.