Carbide tools play key roles in present machine manufacture. The mechanical property and cutting performance of carbide tools are improved obviously when adding micro rare earth (RE) elements into carbide tools. By means of some apparatus, such as materials testing machine, Scanning Electron Microscope (SEM), dynamometer, microscope and electron probe microanalyser, the traditional and RE carbide tools, P30 (YT5 and YT5R), P20 (YT14 and YT14R), M10 (YW1 and YW1R), K30 (YG8 and YG8R), are studied and compared by doing a lot of experiments. These experiments show that the bending strength, fracture toughness and anti-impact capability of RE carbide tools are improved remarkably, and their hardness increased a little. Moreover, the cutting force, tool-chip friction coefficient and wear of RE carbide tools decreased in cutting. In addition, the effect and cutting principium of RE element to carbide tools are analyzed and discussed, which is beneficial to the research and application of RE carbide tools.