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In this study, heavy rare-earth Y element was added to D2 cold work die steel to improve its carbide morphology and distribution, thereby increasing its impact resistance. A comprehensive study was conducted on the morphology and distribution of carbides in D2 steel in the as-cast, as-forged, and spheroidized annealing states. After the forging process, the degree of breakage of the network distribution of the as-forged M7C3 eutectic carbide morphology in the Y-containing D2 steel increased. As the Y content increased from 0 to 0.0210 wt%, the secondary dendrite spacing of the as-cast M7C3 eutectic carbides as well as the volume fraction and average size of carbide clusters decreased from 43 μm, 16.7%, and 29 μm–31.96 μm, 14.2%, and 23 μm, respectively. After the spheroidized annealing process, the addition of Y increased the M7C3 eutectic carbide spheroidization degree. Moreover, the number of the M7C3 secondary carbides increased from 50/25 to 71/25 μm2, and Y addition increased the number of dimples in the impact fracture and proportion of high-angle grain boundaries from 79.1% to 93.4%. Finally, the longitudinal impact toughness of D2 cold work die steel increased from 103.9 to 163.2 J.