The invention discloses rare earth steel and a preparation method of the rare earth steel. The rare earth steel comprises the following components of, in percentage by weight, 0.01%-0.05% of C, 0.15%-0.3% of Si, 0.4%-0.5% of Mn, 8%-10% of Cr, 2%-2.5% of W, 0.2%-0.25% of V, 0.05%-0.1% of Ta, 0.001%-0.01% of Zr, 0.3%-0.6% of Y<2>O<3> and the balance Fe; during preparation, Cr, W, Ta, Fe, Si, Mn andY are smelted into metal mother liquor, then mixed gas of CO<2> and Ar serving as an oxidizing agent is introduced into the alloy mother liquor, Y is oxidized into Y<2>O<3>, Zr, V and C are added, casting is performed after melting down; electroslag remelting is carried out on a cast ingot in a protective atmosphere, purifying is carried out; austenitizing is carried out on a purified steel ingot,then the steel ingot is subjected to pressure machining to form a steel plate, water cooling is carried out after pressure machining; and heat treatment is carried out on the steel plate obtained through pressure machining, a yttrium nanometer precipitated phase is precipitated from the steel plate, and the rare earth steel is obtained. According to the rare earth steel and the preparation methodof the rare earth steel, RAFM ( Reduced Activation Ferritic / Martensitic ) steel can be produced in a smelting and casting mode, the yield of the RAFM steel can be increased, and meanwhile the high-temperature mechanical property of the RAFM steel is improved.