Interest in fluids with strong magnetic properties has developed in recent years in connection with technical applications. Artificially created magnetic fluids are suspensions of very fine (∼10-6 cm)particles of ferromagnetic material in ordinary (as a rule nonconducting) liquids. This review brieflydescribes the methods of preparation and considers the stability problems of magnetic colloids. Itdeals principally with their physical and hydrodynamic properties. It summarizes the results oftheoretical and experimental investigations of the effect of a magnetic field on the equilibriumconditions and on the character of the motion of the suspensions. A considerable part of the articleis devoted to an analysis of critical phenomena—instability of the free surface of the liquid in anexternal field and thermoconvective instability. The mechanisms of relaxation of the magnetization ofa suspension are discussed; the most important of these are rotational Brownian motion of theparticles and the Néel fluctuation mechanism, which leads to the superparamagnetism of subdomainparticles of a ferromagnetic material. Important differences are noted between the hydrodynamics ofsuspensions of superparamagnetic and of ferromagnetic particles. In the latter case it is necessary totake account of rotation of the particles themselves, which greatly complicates the picture of theinteraction of hydrodynamic and magnetic phenomena. Consideration is given to various effectscaused by internal rotation: anisotropy of the viscosity and of the magnetic susceptibility, entrainmentof the suspension by a rotating field, and dependence of the kinetic coefficients on the field intensity.