The effects of rare earth oxides CeO2 and La2O3 on the microstructure and corrosion resistance of laser clad nickel-based alloy coatings were investigated. The nickel-based alloy powder with CeO2 or La2O3 was laser clad on to a steel substrate. The coatings were examined for microstructural features, compositions, phase structure and corrosion resistance. The results were compared with those for coatings without CeO2 and La2O3. The comparison indicated that the addition of CeO2 or La2O3 can refine and purify the microstructure of coatings and reduce dilution of clad material from the substrate. Moreover, the addition of rare earth oxide can cause the following variations of phase structure of the coating: (a) increase of diffraction angle, (b) decrease of interplanar spacing, (c) reduction of lattice constant and (d) appearance of new compounds with the rare earth. The corrosion resistance of clad coating with rare earths was enhanced significantly. The mechanism of these effects is also discussed in this paper.