Using the chemical coprecipitation method, the comparative experiments were carried out by changing the process parameters such as growth temperature, pH of coating environment, cleaning and dispersion mode of Fe3O4 nanoparticles. The best parameters and conditions of Fe3O4 nanoparticles in growth stage, coating stage and dispersion stage were summarized and the previous preparation process was optimized to improve the dispersion stability of oleic acid coated magnetic particles in kerosene. The samples were characterized by XRD, TEM and VSM and the rheological properties of the kerosene based magnetic fluid were analyzed by rotating rheometer. The results show that the average particle size of the modified Fe3O4 nanoparticles is about 14 nm, showing a regular sphere. The saturation magnetization of modified Fe3O4 nanoparticle is 60 emu/g and high-density kerosene based magnetic fluid with a mass fraction of 60% was prepared. Compared with ordinary magnetic fluid, the high-density kerosene based magnetic fluid obtained by this preparation process has a great improvement in saturation magnetization and oxidation resistance and has higher application value.