This paper, based on China's REE industrial status, applies SWOT to analyze the current status of REE industrial Development in Inner Mongolia, studies its pros and cons, opportunities, issues and presents recommendations. Inner Mongolia possesses abundance of REE resources and has formed an entire industrial system from mining, beneficiation, metallurgy, fine processing, new materials to applications. Inner Mongolia is the largest REE producing base and supply base in China, of obvious predominance in raw materials reservation, industrial base and locality, but of issues in low comprehensive REE use ratio, environmental pollution and insufficient innovation. This paper presents suggestions on governmental controls in promoting REE's sustainable development, on boosting companies' research ability and cooperation with universities and institutes, and on intensifying protection on REE and environment.