This paper describes a fabrication of Fe-dispersed hydrophilic magnetic fluid and its application to oil seal in combination with the Nd-permanent magnet. The results are as follows; 1) Using silica coated iron particle of magnetization of 125.5 emu/g (at 10 kOe) and the mean particle size of 100 $AA$, after multiple adsorption to the surface of silica coated iron particle with oleic acid ion, D.B.S. and T.M.A. ion, hydrophilic Fe-magnetic fluid [70 %(g/∝)Fe, magnetization of 52 emu/g and viscosity of 1450 cp] can be produced by dispersing the iron particle in ethylene glycol solution. 2) The oil seal apparatus consisting of six stages of Nd-permanent magnet (3200 Gauss) and Fe-magnetic fluid [70 %(g/∝) Fe] showed an excellent pressure resistance of 7400 g/$ extrm{cm}^2$ under the gap between shaft and oil seal was 0.2 mm.