Te is a seldom-used alloying element, which is mainly used in free-machining steel. The Te content in this kind of steel is relatively low, and only a small amount of MnTe is generated. In previous studies, the effect of Te on the formation of inclusions was not fully studied. In order to clarify the mechanism, different amounts of tellurium were added into 38MnVS6 steel to form a certain amount of MnTe. The MnTe wrapped the MnS, forming a composite inclusion. With the increase of Te content in the steel, the diameter of inclusion increased, while the aspect ratio of inclusion varied little. The aspect ratio of most inclusions was in the range of 1~3. Besides, the MnS in the MnTe-MnS composite inclusions gradually changed from one big particle to several small particles. The solidification of the steel, as well as the precipitation of MnS and MnTe, was the main factor that affecting the formation of the composite inclusion. The mechanism of the process was systematically expressed in the current study.