Cold rolled IF sheet has a high requirement for surface quality. Nowadays, more than half of surface defects in cold rolled sheet are caused by non-metallic inclusions generated in steelmaking and casting process. Three types of surface defects as sliver, peeling and hole were found in industrial samples. To investigate the evolution process of inclusion induced surface defects, hot rolling and cold rolling of industrial slab samples were carried out in pilot mill, then surface defects after cold rolling were analyzed with scanning electron microscope equipped with energy dispersive spectrometer (SEM-EDS). The results show that, the inclusions which create surface defects are mainly from deoxidation products and entrapped mold powder. Surface defects like pockmark, peeling, dent and scratch in cold rolled IF sheet are determined by position, size and property of the inclusions. Subcutaneous big size inclusions can lead to peeling and dent, while surface inclusion particles would lead to pockmark and scratch or sliver. To improve surface quality of cold rolled sheet, some measures should be adopted to further decrease and remove macro inclusions, and avoid hard inclusions to be bare to the slab surface.