Abstract Macrosegregation is one of the most typical defects during solidification which greatly limits the mechanical properties of the key steel components. Oxygen and its inclusion have been considered to cause the compositional heterogeneity in solidifying steel besides the thermo-solutal convection. However, it is still not clear how to robustly reduce the oxygen and inclusion and consequently macrosegregation in widely used steels. Here, we reported the mechanism to homogenize the steel via Rare Earth (RE) addition. A series of experimental characterizations of 3-ton bearing steel ingots demonstrated that RE is able to decrease the oxygen content and inclusions to a lower level than the conventional Al-deoxidation process. The common oxide and sulfide can be modified into spherical or ellipsoidal RE2O2S with a dispersed distribution. The multi-component/multi-phase macrosegregation simulations show that the larger size and population of RE2O2S are required to trigger channel segregation in RE steel due to its higher density compared to the alumina-based inclusions. The theoretical calculation reveals that the critical oxygen content in RE steel to eliminate channel segregation is dramatically increased into 20 ppm, which indicates a lower risk of destabilization of mushy zone and initiation of channel segregation in RE steel. In addition, the global macrosegregation severity is reduced in RE steel. Such conclusion is fully validated in larger 9.5-ton and 100-ton steel ingots. In terms of the interaction between inclusion motion, fluid flow, and solidification, this study elucidates the mechanism of RE to reduce macrosegregation for the first time, and highlights an economic, common, and controllable method to fabricate homogenized steel by RE addition.