Continuously cast slab may contain linear cracks in the middle of the slab thickness. The cracks in the side triangle region are called the internal transverse cracks. In many cases, the cavity cannot be closed through the rolling process and thus presents itself as a defect. In this paper, the internal transverse cracks of continuously cast slabs of a Nb-bearing peritectic grade of steel are investigated using electron probe microanalyser and optical microscope. A eutectic mixture rich in Nb was found existing on the crack surface. Based on the phase diagram of this system, as well as the conditions of continuous casting, formation mechanism of the eutectics and its relationship to the internal cracks is proposed. Further evidence is provided by an alloying experiment.