To get more fundamental information on the control of rare earth inclusions in solid steel, the evolution behavior of oxide inclusions during thermo-mechanical treatment of stainless steel containing yttrium at 1423K (1150°C) was investigated in detail. Homogeneous spherical SiO2–MnO–Al2O3–Y2O3 inclusions were observed in the as-cast steel. After thermo-mechanical treatment, the homogeneous oxide inclusions changed to heterogeneous ones with gray-colored (SiO2–Y2O3)-rich phase and dark-colored MnO–Cr2O3–Al2O3 spinel phase owing to the mutual effects of (i) crystallization of the glassy oxide and (ii) reaction between inclusions and steel matrix. In addition, the oxide inclusions were elongated along the deforming direction of steel during hot deformation process. With increasing reduction of the steel, the MnO–Cr2O3–Al2O3 spinel phase (dark phase) were crushed into small pieces. And the two phases (gray and dark phases) in inclusions gradually became separated from each other due to different deformability. The deformation index of inclusions gradually decreased with an increase in the deformation degree of the steel, indicating that the deformability of inclusions got worse.