To investigate the formation of internal cracks in steel billets during soft reduction, fully coupled thermo-mechanical finite element models were developed using the commercial software ABAQUS, also casting and soft reduction tests were carried out in a laboratory strand casting machine. With the finite element models, the temperature distribution, the stress and strain states in the billet were calculated. The relation between internal cracks and equivalent plastic strain, as well as maximal principal stress was analyzed. The results indicate that tensile stresses can develop in the mushy zone during soft reduction and the equivalent strain nearby the zero ductility temperature (ZDT) increases with decreasing solid fraction. Internal cracks can be initiated when the accumulated strain exceeds the critical strain or the applied tensile stress exceeds the critical fracture stress during solidification.