In this paper, according to the different kinds of magnetic particles in the magnetic fluids, the preparation methods of ferrite, metal, and iron-nitride magnetic fluids and the prospect of the preparation technology are introduced. According to the properties of the magnetic fluids, the application of it to the sealing, bearing, grinding, et al are also introduced. With the more researching on the properties and the functions of the magnetic fluids, the application range of it will be more wider.