In aluminum deoxidized medium manganese steel, spinel inclusions are easily to form during refining, and such inclusions will deteriorate the toughness of the medium manganese steel. Rare earth inclusions have a smaller hardness, and their thermal expansion coefficients are similar to that of steel. They can avoid large stress concentrations around inclusions during the heat treatment of steel, which is beneficial for improving the toughness of steel. Therefore, rare earth Ce is usually used to modify spinel inclusions in steel. In order to clarify the modification mechanism of spinel inclusions in medium manganese steel with Ce treatment, high-temperature simulation experiments were carried out. Samples were taken step by step during the experimental steel smelting process, and the inclusions in the samples were analyzed by SEM-EDS. Finally, the experimental results were discussed and analyzed in combination with thermodynamic calculations. The results show that after Ce treatment, the amount of inclusions decrease, the inclusion size is basically less than 5 μm, and the spinel inclusions are transformed into rare earth inclusions. After Ce addition, Mn and Mg in the spinel inclusions are first replaced by Ce, and the spinel structure is destroyed to form CeAlO3. When the O content in the steel is low, S in the steel will replace the O in the inclusion, and CeAlO3 and spinel inclusions will be transformed into Ce2O2S. By measuring the total oxygen content of the steel, the total Ce content required for complete modification of spinel inclusions can be obtained. Finally, the critical conditions for the formation and transformation of inclusions in the Fe-Mn-Al-Mg-Ce-O-S system at 1873K were obtained according to thermodynamic calculations.