The water-based magnetic fluid (WMF) and oil-based magnetic fluid (OMF) were prepared successfully with the iron oxide spent catalyst by mechanochemical method. The iron oxide spent catalyst contains about 75% magnetite, 15% alkali metal and 10% ceria. The experimental purpose is to reclaim the spent catalyst and decrease the environment pollution. In this paper, the peculiarity of magnetic fluids was characterized by VSM, XRD, and TGA, etc. As a result, the saturated magnetizations of water-based and oil-based MFs are 22.09 emu/g and 30.02 emu/g, respectively. Their particle sizes are 15.11 nm and 16.07 nm, respectively. The prepared MFs would be used in separating low density metal from scrap, thereby decreasing the environmental pollution. Therefore, not only good magnetic fluid was prepared with the spent catalyst for the first time, but also the spent catalyst was recycled in an effective way to reduce environmental pollution.