The present invention provides steel superior in machinability comprised of, by wt %, C: 0.005 to 0.2%, Si: 0.001 to 0.5%, Mn: 0.2 to 3.0%, P: 0.001 to 0.2%, S: 0.03 to 1.0%, T.N: 0.002 to 0.02%, T.O: 0.0005 to 0.035%, and the balance of Fe and unavoidable impurities, said steel satisfying one or both of Mn/S in the steel being 1.2 to 2.8 or an area ratio of pearlite over a grain size of 1 .mu.m in a microstructure of the steel being not more than 5%.