A magnetic fluid and a process for producing the same are provided. The magnetic fluid is an excellent fluid which mightily and precisely actuates by the action of an external magnetic field so that its viscosity can be significantly increased and be easily and precisely controlled by regulating the external magnetic field applied thereto. The magnetic fluid is also excellent in the unsusceptibility to oxidation and dispersibility of the particles and has a sufficiently wide viscosity range. The magnetic fluid comprises magnetic metal particles coated with an oxidation-preventive film stably dispersed in a solvent, wherein the dispersion conditions are maintained, and the process for producing the fluid comprises forming an oxide film on the surface of raw oxide particles of magnetic metal particles, reducing the raw oxide particles coated with the oxide film to obtain magnetic metal particles coated with an oxidation-preventive film, and stably dispersing the magnetic metal particles coated with an oxidation-preventive film in a solvent.