Clean heavy rail steel was prepared by the process of vacuum induction furnace smelting, forge work and rolling. Effects of Rare earths (RE) on phase transformation and microstructure of heavy rail steel were investigated by thermal simulation machine, metallographic microscope and scanning electronic microscope. Thermal simulate tests indicate that, RE can move the C curve of pearlite transformation to lower right, prolong the incubation period of pearlite and improve the stability of undercooled austenite. The minimum incubation period of pearlite transformation is increased from 24s to 30s by RE. Furthermore, RE can decrease the critical cooling rate of pearlite transformation from 1°C•s-1 to 0.5°C•s-1 and the critical cooling rate of quenching from 15°C•s-1 to 13°C•s-1. Additionally, RE can fine the annealing and anormalizing pearlite notably. The pearlite laminae distance of heavy rail steel added RE is decreased by 12.9% (annealing) and 13.3% (normalizing), respectively.