Abstract: Nonmetallic inclusions in steel significantly influence the steel life, quality, toughness, and corrosion resistance. Pitting corrosion is the most common type of localized corrosion in stainless steel. Rare-earth elements, which are key materials in the metallurgical sector, largely influence the modification of sulfur (S) and oxygen (O) inclusions in steel. Numerous experimental studies have been conducted on the corrosion of the rare-earth metal cerium (Ce); however, studies on the microscopic-scale mechanism are few. In this study, in situ corrosion observation and the first-principle calculations based on density functional theory were applied to investigate the effects of the rare-earth element cerium on inclusions in J5 stainless steel and the inclusion-induced corrosion process. The changes in the inclusion composition and the primary types of inclusions in the steel were investigated by scanning electron microscopy coupled with energy-dispersive X-ray spectroscopy. The results show that CeAlO₃‒Ce₂O₂S, Ce₂O₃‒Ce₂O₂S, and MnS are representative inclusions. MnS and other oxide inclusions in stainless steel were treated with Ce to generate stable Ce₂O₃, Ce₂O₂S, and CeAlO₃ inclusions, according to formation energy calculations. The surface energy of the Fe (100)-2 plane is measured as 2.4374 J·m⁻², and the work function of this crystal plane is predicted to be 4.7352 eV. The crystal plane stability was examined according to the surface energy. The work functions and potential differences between the inclusion and the steel matrix were analyzed to compare the trend of pitting corrosion induced by different Ce-containing inclusions, and the influences of different atomic positions, atomic numbers, and different slab models on the work function were explored. Compared with the electronic work function of the Fe (100)-2 surface, the potential difference between MnS and the three modified inclusions CeS, Ce₂O₃, and Ce₂O₂S is typically less than zero, and the potential difference of CeAlO₃ is about 0 eV. The average work function of the crystal plane with a large number of nonmetal atoms such as O and S is higher. Ce addition reduces the work function of the crystal plane, and the molecular mechanism of pitting corrosion according to different crystal planes and termination planes of inclusions is revealed. The five types of inclusions and the steel matrix are in the following order: CeAlO₃>Fe>MnS>CeS>Ce₂O₂S>Ce₂O₃. The experimental findings on composite inclusions in stainless steel reveal that Ce₂O₃ has the highest chance of pitting corrosion, and CeAlO₃ can significantly improve steel corrosion resistance.