Ni-base RE cladding layer was prepared on Monel 400 alloy by Laser cladding technology. The microstructure, chemical composition, phase identification, hardness distribution, cavitation erosion resistance and failure mechanisms of the modified layer were examined by using SEM, EDS, XRD, microhardness tester and ultrasonic cavitation erosion tester, respectively. The results show that the Y₂O₃ can refine the grain. The cladding layer was mainly composed of γ-Ni solid solution, Ni₃B and the high-hardness carbides (Cr₂₃C₆ and Cr₇C₃). The average hardness of the modified layer can reach 886 HV. The cavitation erosion resistance of Ni-based RE cladding layer was increased by 8 times compared to the Monel 400 alloy. The failure mechanism of the cladding layers is the erosion peeling of the dendrite. Grain refinement strengthening and the net structure blocking grain boundary are the key to improving the cavitation corrosion resistance of the cladding layer.