A magnetic anti-counterfeit label and identification system thereof, wherein the magnetic anti-counterfeit label (1) comprises a substrate (2), a magnetic ink layer, an opaque layer (4) and a protective coating (5). The magnetic ink layer covers the substrate (2). The opaque layer (4) covers the magnetic ink layer in order to visually hide the characters, bar code, and other patterns which are printed using magnetic ink. Additionally the protective coating (5) is composed of a polymer or a metal layer, which covers opaque layer (4). This identification system comprises a magnetic sensor (6) for sensing the magnitude of the magnetic field emitted by the magnetic anti-counterfeit label, a permanent magnet (7) or an electromagnet for magnetizing the magnetic anti-counterfeit label, a digital processing circuit (8) that is electrically connected to the magnetic sensor (6), and a frame (9) that is used to hold the magnetic sensor (6) and the digital processing circuit (8). The digital processing circuit (8) outputs a code corresponding to the magnetic anti-counterfeit label.