To investigate the effect of Ce and Mg addition on the evolution of inclusions in Al-killed molten steel, both thermodynamic calculations and laboratory-scale experiments were carried out in the present work. The samples taken at different time after various addition amounts and order of Ce and Mg were analyzed by scanning electron microscopy and energy dispersive spectroscopy. The results show that Al 2 O 3 was firstly modified to MgAl 2 O 4 and then the transformation from MgAl 2 O 4 to CeAlO 3 with the addition order of Al → Mg → Ce. Under the addition order of first Ce followed by Mg, CeAlO 3 was eventually modified to MgAl 2 O 4 in the case of low Mg contents, and was modified to MgO with high Mg contents. The thermodynamic conditions were performed to discuss the mechanism of inclusions formation and transformation. More importantly, under the condition of Ce addition followed by Mg addition, due to the transformation from large-sized RE-inclusions to disperse MgO-containing ones, the average sizes of inclusions reduced from 3.12 μm and 3.28 μm to 1.99 μm and 1.83 μm, respectively. This evolution behavior of inclusions was firstly observed in-situ by a novel experiment, in which the large-sized CeAlO 3 clusters were disaggregated to MgO-Al 2 O 3 particles with smaller sizes. The control strategy of inclusions proposed in this study is expected to improve the casting process and the product quality of Al-killed steel containing rare earth element.