The effect of various gadolinium contents on the number density and morphology of sulfide in Al-killed high-sulfur steel was investigated. Meanwhile, the effect of characterization of sulfide inclusions, i.e., number density and morphology on the cutting performance of steel also were studied. The evolution process of sulfide inclusions with the increasing T.Gd content from 0 ppm to 198 ppm in steel samples could be described as follows: MnS → (Gd-O-S)-MnS→(Gd-S)-MnS →Gd-S. As the gadolinium content in the steel increased, sulfide inclusions with an aspect ratio of < 3 increased from 26.1 % to 99.7 % and the number density of sulfides decreased from 438 #/mm2 to 80.4 #/mm2. Spherical sulfides could form micro-holes during cutting, facilitating the chip-breaking process, whereas long-strip MnS tended to self-break during cutting. The higher the proportion of C-type chips in the cutting process, the better the cutting performance of the material. Therefore, spherical sulfides exhibited superior modification effects on surface finishes compared to long-strip sulfides. In low-speed cutting, sulfide morphology predominantly affected surface roughness, while in high-speed cutting, the number density of sulfides became the dominant factor. The addition of gadolinium can effectively decrease the surface roughness of the material at various cutting parameters. Moreover, the Gd-O film can be formed on the tool surface was observed after the addition of gadolinium in the steel, which can increase the lubrication during the cutting process and reduce the tool surface wear. •Novel heavy rare earth gadolinium for modifying MnS inclusion and enhancing cutting performance of material was proposed.•The mechanism of spherical sulfides was more favorable for improving the cutting properties of the steel was elucidated.•The morphology and number density of sulfide had various effects on the surface roughness at different cutting parameters.•The Gd-O film was observed on the tool surface, which reduced the tool surface wear.