Serious problems arise when the magnetic fluid seal technology is needed to use in assemblies working in water or other liquid environment. Some efforts have been up to time made to design hybrid, two stage sealing structures with shields or mechanical seals used as protection measures to the magnetic fluid seal. Anyway, earlier or later there is always problem with direct contact between magnetic fluid and the environmental liquid. In the paper are presented results of experiments carried out with one stage rotating magnetic fluid seal operating in an direct contact with utility water. The special test procedures have been elaborated and practically used, with the aim to define main characteristics of magnetic fluid seals and to simplify experiments. These characteristics were: critical pressure, critical motion velocity and working life of the seal. Four grades of commercial, silicon based magnetic fluids of hydrophobic properties were tested in a single stage sealing system. The results of tests are presented in the form of tables and diagrams. It is concluded that hydrophobic commercial magnetic fluids could be efficiently used in rotating shaft seals however within limited and rather low range of motion velocity.