The addition of rare earth (RE) can increase the thickness and refine the microstructure of the carburized surface layer of steels. To account for the effect of RE addition on the microstructure in the carburized layer, the phase field method is used to simulate the precipitation of (Fe,M)3C (M=Cr or Ni) phases during 1133K RE carburizing and 1203K conventional gas carburizing. The microstructure evolution in the RE carburized layer shows that high-density (Fe,M)3C particles with a small size and spherical shape precipitate from the supersaturated austenite. The calculated results show that the addition of RE increases interfacial energies but decreases elastic energies, which play a significant role in the coarsening kinetic of (Fe,M)3C particles, and also makes the stress and strain surpass the yield stress and critical strain of the austenite matrix, respectively, which results in the refin ment of the austenitic grain by dyn mic recrystallization. Our simulated results have been verified by experimental observations.