In this work, the mechanism of crack propagation during hot‐rolling process of a typical medium‐carbon 40Cr alloy steel is investigated by cracks characterization, thermodynamic calculation, and confocal laser scanning microscopy (CLSM). The depth of cracks is about 2.5 mm and its length along with rolling direction can even reach 2000–3000 mm. Thermodynamic calculations show that the oxide phases including MnSiO3 and MnCr2O4 can generate when the oxygen content is 0.3–1.0 wt%, suggesting that low oxygen is beneficial to the selective oxidation of Si, Mn, and Cr elements from the medium‐carbon low alloy. Furthermore, in situ experiment by CLSM indicates that the submicron Cr–Mn–Si–O particles can refine austenite grains. In addition, the contents of chain proeutectoid ferrite in the steel containing Cr–Mn–Si oxides increase by 6.3% and 12.0% at the lower cooling rates of 5 and 10 °C min−1, respectively, comparing with that of no‐oxide particles steel. The submicron Cr–Mn–Si–O particles can refine austenite grains, which induces the precipitation of chain proeutectoid ferrite. Thus, the serious surface cracks propagate along the chain proeutectoid ferrite with the submicron Cr–Mn–Si–O particles during the hot‐rolling process.