The experiment used agar as a coating agent to manufacture dysprosium-neodymium modified water-based magnetic fluid coated by agar with the method of chemical co-precipitation when the two rare-earth element dysprosium and neodymium were precipitated with Fe³⁺ and Fe²⁺ together, which has high stability and a strong magnetic field. After the experimental research on all aspects of factors influencing the magnetic fluid, the best conditions were summarized as follows: Under the premises those the mol ratio between Fe and (Nd³⁺+Dy³⁺) is 29:1 and it between Fe³⁺ and Fe²⁺ is 1.70 to 1.75, the mol ratio between Nd³⁺ and Dy³⁺ should be 1:1; 25%NH₃H₂O is the precipitation reagent and the pH value regulator, which is used to control the pH value between 9 and 11; Under the above-mentioned conditions, dysprosium-neodymium modified water-based magnetic fluid is manufactured at the reaction temperature 35°C. And then the agar with a high degree of biological affinity is used as a coating agent to coat the above product, under the conditions of the temperature 55°C and the pH value 2.5, whose best dosage is 0.0100g each 55mL liquid. The dysprosium-neodymium ferrite water-based magnetic fluid manufactured under the best conditions has black color, and its stability and magnetic properties are better than those of the ordinary one. It will appear a bright magnetic halo under the combined effect of the visible light irradiation and the role of magnetic fields. In addition, its characterization was tested in this experiment, such as the situation of surface coating, the stability, the viscosity, the magnetization intensity, etc.