The catalytic graphitization mechanism of coal based carbon materials with light rare earth elements was investigated using X-ray diffraction, scanning electron microscopy, energy-dispersive X-ray spectroscopy, selected area electron diffraction, and high-resolution transmission electron microscopy. The interface between light rare earth elements and carbon materials was carefully observed, and two routes of rare earth elements catalyzing the carbon materials were found: dissolution-precipitation and carbide formation decomposition. These two simultaneous processes certainly accelerate the catalytic graphitization of carbon materials, and light rare earth elements exert significant influence on the microstructure and thermal conductivity of graphite. Moreover, by virtue of praseodymium (Pr), it was found that a highly crystallographic orientation of graphite was induced and formed, which was reasonably attributed to the similar arrangements of the planes perpendicular to (001) in both graphite and Pr crystals. The interface between Pr and carbon was found to be an important factor for the orientation of graphite structure.