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A new dispersing process based on a surface property of cobalt-modified γ-Fe2O3(Co-γ-Fe2O3) magnetic particles was developed in order to improve the dispersibility of Co-γ-Fe2O3 in magnetic coating. Heat of immersion into water and adsorption isotherm of water revealed that Co-γ-Fe2O3 particles have strongly hydrophilic surfaces. The Co-γ-Fe2O3 particles with the hydrophilic surface showed better dispersibility in water than that in organic solvent. Drying of aqueous suspension of particles caused hard agglomerations of particles which were difficult to redisperse in paint using organic solvent. To overcome this problem, the displacement of water in the aqueous suspension by organic solvent such as alcohol, ketone and so on, was investigated. The dispersibility of Co-γ-Fe2O3 particles in the magnetic paint using organic solvent was significantly improved by the combination of dispersion in water and subsequent displacement of water by organic solvent. Thus, saturation magnetization and surface roughness of the coating made by the new process were improved about 10% and 50%, respectively, compared with the coating by a conventional process.