Abstract: Inclusions in free cutting steel such as BN, MnS, Al₂O₃ and TiN were characterized by nanoindentation. The improvement of BN inclusions on the machinability of the steel was discussed. The error between nanoindentation and macrohardness measurement was analyzed. The hardness of BN inclusions in as-cast samples is lower than that of MnS inclusions, but BN inclusions after forging become harder than MnS, even though these three kinds of inclusions are far softer than the based metal. BN inclusions in as-cast samples and forged samples are stress concentration sources, lubricants and enclose hard particles, therefore improve the machinability of the steel. Nanoindentation characterization and macrohardness measurement have certain error.