The present investigation endeavors to explore the influence of rare earth elements on the strength and plasticity characteristics of low-carbon microalloyed steel under tensile loading conditions. The findings from the conducted tensile tests indicate that the incorporation of rare earths leads to a notable enhancement in the yield strength, ultimate tensile strength, and ductility properties of the steel. A comparative analysis of the microstructures reveals that the presence of rare earths significantly refines and optimizes the microstructure of the microalloyed steel. This optimization is manifested through a reduction in grain size, diminution of inclusion sizes, and a concomitant rise in their number density. Moreover, the addition of rare earths is observed to foster an increase in the volumetric fraction of carbides within the steel matrix. These multifaceted microstructural alterations collectively contribute to a substantial strengthening of the microalloyed steel. Furthermore, it is elucidated that the synergistic interaction between rare earth elements and both carbon (C) and niobium (Nb) in the steel matrix augments the extent of the Lüders strain region during the tensile deformation of specimens. This phenomenon is accompanied by the effective modification of inclusions by the rare earths, which serves to mitigate stress concentrations at the interfaces between the inclusions and the surrounding matrix. This article systematically evaluates the modification mechanism of rare earth microalloying, which provides a basis for broadening the application of rare earth microalloying in microalloyed steel.