Magnesium hydroxide[$Mg(OH)_2$] was prepared by hydrothermal method using oleic acid as surface modifier. $Mg(OH)_2$ particles exhibit flake morphology with micrometer in size and the surface modification starts from the reaction of $C_{17}H_{33}COO^-$ group, derived from oleic acid molecule in alkaline environments. It is found that hydrothermal treatment conditions such as pH, temperature and reaction time are important for the control of the morphology and properties of surface modified magnesium hydroxide. The obtained magnesium hydroxide groups were characterized by FE-SEM, XRD, FT-IR, TGA. The dispersion in organic solution was determined by sedimentation test and compared with the result of raw $Mg(OH)_2$.