Light beam propagation at a prism-magnetic fluid film interface is experimentally studied. The magnetic fluid is made through dispersion of synthesized cigar-shaped sub-micron particles of Fe2O3 in an oil solution. This was injected into a glass cell with an active area of 10mm2 and a depth ranging from 10 microns to 30 microns whose base is a glass microscope slide and on the top it was covered with a glass prism. The set up was developed by one of the authors to measure light switching at a prism-liquid crystal interface in a previous publication.1 Polarized Light (TE or TM) from a He-Ne laser impinges at the prism-magnetic film interface. The external reflected light is detected by a photodiode connected to a data acquisition system. Since the properties of the magnetic fluid can be modulated by external magnetic fields, we investigated the effects of the magnetic field on the refractive index of the magnetic fluid. For our magnetic fluid, the reflection of light has been investigated as a function of particles concentration and thickness of the films with a wavelength of 633nm and both TE and TM polarization, and applied magnetic fields up to 25 Oe. It was found that the intensity of reflected light increases with increasing magnetic field up to 4 times the initial value, and saturates at 20 Oe for TE light, while decreases with increasing magnetic field up to 4 times less for TM light with the same saturation value. Moreover, under a given magnetic field, the output light increases with the increasing film thickness in TE polarization, and decreases with the increasing film thickness in TM case. The refractive index of the magnetic fluid depends on the concentration of the dilute oil-based magnetic fluid under zero field. These behaviors are explained in terms of the organization of the submicron particles when the magnetic field is applied.2 The cigar-shaped sub-micron particles are oriented along their long axis to form an organized mesostructure. The different aggregation ability of the magnetic fluid particle is responsible for the variation of the optical properties under different magnetic fields and for different polarization of the incident light. It is noteworthly that the magnetically modulated refractive index of the magnetic fluid film could have great potential in electro-optical applications. In particular, according to the experimental results, we believe that the fluid films that we are proposing, thanks to the optical responses and the relative times, is a very good candidate to design Fiber Optical Sensors (FOS) for magnetic fields.© (2010) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.