An object of the present invention is to provide a rubber composition having excellent processability while excellent heat build-up reduction effect is maintained; and a pneumatic tire that uses the rubber composition. The rubber composition of the present invention contains: a diene rubber containing from 5 to 70 mass % of a modified butadiene rubber obtained by modifying an unmodified butadiene rubber (A) with a carboxy group-containing nitrone compound (B), the unmodified butadiene rubber (A) containing from 2 to 45 parts by mass of an unmodified low molecular weight butadiene rubber (A1) having from 1.5 to 60 mol % of vinyl bonding and having a number average molecular weight (Mn) of 2000 to 60000 per 100 parts by mass of an unmodified butadiene rubber (A2) having a number average molecular weight (Mn) greater than that of the unmodified low molecular weight butadiene rubber (A1).