<p>High-temperature smelting, in situ microstructure analysis, thermodynamic, nucleation kinetics and first-principles calculations were performed to investigate the effect of magnesium on the MnS/Nb(C, N) inclusion characteristics and microstructure in micro-alloyed steel. The composition analysis suggests that there exist three kind of inclusions, manganese sulfide, carbonitride, and complex inclusions. The complex inclusion is three layers structure with magnesia-alumina spinel as the core, manganese sulfide as the sub-layer, and (Nb, V)-containing carbonitride as the outmost layer. The inclusion evolution suggests that the alumina transforms into magnesia-alumina spinel, and the clustered carbonitride transforms into long-strip type with increasing magnesium content. After magnesium addition, the number of network-like grain boundary allotriomorphic ferrite decreased sharply, and almost presented as blocky ferrite. The ferrite nucleation on MnS is always energetically less favorable than nucleation at austenite grain boundaries but VN facilitates to IGF nucleation. Therefore, the ferrite prefers to nucleate on (Nb, V)(C, N), and then, the ferrite grow, surrounding MgAl₂O₄–MnS–(Nb, V)(C, N) because of Mn-depleted zone(MDZ). Finally, it inhibits the grain boundary allotriomorphic ferrite along grain boundary. The magnesium addition promotes the austenite dendrite nucleation and growth and there is small space for grain boundary allotriomorphic ferrite. In addition, the clustered carbonitride transforms into long-strip type after magnesium addition. This is also related to the last-to-solidify region and magnesium addition promotes the austenite dendrite nucleation and growth. The (100), (110) and (111) surface energies decrease and have approximate surface energy values after magnesium addition. Therefore, the various crystal directions grow faster with close growth rate, and the austenite dendrite eventually presents developed equiaxial crystal morphology.</p>