A steel for cold forging containing C up to 0.6%, Si up to 0.5%, Mn up to 2.0%, S 0.003 to 0.04% and Te up to 0.03%, wherein ratio %Te/%S being at least 0.04, and further, Al up to 0.04%, N up to 0.02% and O up to 0.0030%, and the balance being substantially Fe exhibits both good formability in cold forging and good machinability.The steel may further contain one or more of additional alloying elements selected from the group of Ni, Cr and Mo, the group of V, Nb, Ti, B and Zr, and the group of Pb, Se, Bi and Ca.The steel for cold forging having good machinability is made preferably by agitating molten steel containing adjusted amounts of the alloying elements other than Te, and, if used, members of the Pb group, by introducing non-oxidizing gas thereinto so as to float up and separate large sized particles of non-metallic inclusions, and subsequently adding predetermined amount of Te and other elements.