• Rare earth elements refine prior austenite grain size and promote acicular ferrite formation, enhancing strength and toughness.
• Optimal REE addition of 0.02 wt.% yields a 15% increase in yield strength and 20% improvement in impact toughness.
• REEs modify inclusions and strengthen grain boundaries, contributing to improved mechanical performance.
• The findings support the industrial application of REEs in high-strength steel for automotive and structural applications.