Ring-opening polymerization of epsilon-caprolactone (CL) has been initiated with rare earth phenyl compounds in both bulk and solution. These rare earth phenyl initiators can give polycaprolactone (PCL) with high yield and high molecular weight. The polymerization mechanism is through a coordination-deprotonation-insertion process, by which the monomer inserts on the Ln-O bond of rare earth enolate. The efficiency of rare earth phenyl compounds for CL is high. The effects of reaction conditions, such as reaction time, reaction temperature, and monomer/initiator molar ratio, on the polymerization are discussed. The polymer was characterized by FTIR, H-1-NMR.