Various uses of ferrofluids for technical applications continuously raise interest in the improvement and optimization of the preparation methods. This paper deals with the preparation of finely granulated magnetite particles coated with oleic acid in hydrocarbon suspensions following either chemical co-precipitation from iron salt precursors or wet milling of micron size magnetite powder with the goal to compare the benefits and disadvantages of each method. Microstructural measurements showed that both methods gave similarsized magnetite particles of 10-15 nm. The wet-milled magnetite suspension had a higher saturation magnetization than that obtained in the relatively rapid co-precipitation synthesis. The different efficacies of ferrophase incorporation into kerosene could be related to the different mechanisms of oleic acid bonding to the surface of the nanoparticles. Comparative data showed that wet milling represents a viable alternative to the traditional co-precipitation method since despite of longer processing time, the impact of chemicals on the environment and remnant water in the final product could be avoided.