The paper presents theoretical and practical study of formation of non-metallic inclusions in a medium-carbon free-cutting structural steel. FactSage software package was used for thermodynamic modelling of inclusion behaviour. Formation temperature and the amount of aluminium oxides, boron nitrides, manganese sulphides and aluminium nitrides were calculated. Inclusions in the steel form in the sequence Al2O3 > BN > MnS > AlN. The object of practical research was a cast billet of A38KhGMAR grade steel. It was melted in a laboratory induction furnace; boron and nitrogen were introduced after deoxidation of the melt with primary aluminium. Quality analysis included determination of chemical composition, macro-and microstructure, type and shape of non-metallic inclusions. Fine and uniformly distributed boron nitride inclusions were obtained throughout the metal matrix; their distribution was studied both qualitatively and quantitatively. Beside isolated particles, boron nitrides are also presented as a component of complex inclusions with manganese sulphides. Inclusion morphology is mostly spherical. The size of BN inclusions varies from 0.41 to 7.23 μm.