The effect of rare earth oxides on the microstructure and corrosion behavior of laser-cladding coating on 316L stainless steel was investigated using hardness measurements, a polarization curve, electrochemical impedance spectroscopy (EIS), a salt spray test, X-ray diffraction, optical microscopy, and scanning electron microscopy (SEM). The results showed that the modification of rare earth oxides on the laser-cladding layer caused minor changes to its composition but refined the grains, leading to an increase in hardness. Electrochemical and salt spray studies indicated that the corrosion resistance of the 316L stainless steel could be improved by laser cladding, especially when rare earth oxides (i.e., CeO2 and La2O3) were added as a modifier.