Abstract: Nanosize Fe₃O₄ magnetic powder was first synthesized by method of phase transformation at low temperature, then coated by oleic acid. The coating effect of magnetic powder is better after being kept in the solution （pH:6.90, 80oC） for 50-60min. After that coated nanoparticles were dispersed in the carried liquid to obtain magnetic fluids. Prepared samples were characterized accordingly by XRD,TEM,VSM and IR spectrum. UV spectro-photometer was used for quantitative analysis of coating effects of oleic acid. So the characterization method of the surface modifying effect of the magnetic particles is established.