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Ferrofluids are colloidal suspensions of iron oxide nanoparticles (IONPs) within aqueous or nonaqueous liquids that exhibit strong magnetic properties. These magnetic properties allow ferrofluids to be manipulated and controlled when exposed to magnetic fields. This review aims to provide the current scope and research opportunities regarding the methods of synthesis of nanoparticles, surfactants, and carrier liquids for ferrofluid production, along with the rheology and applications of ferrofluids within the fields of medicine, water treatment, and mechanical engineering. A ferrofluid is composed of IONPs, a surfactant that coats the magnetic IONPs to prevent agglomeration, and a carrier liquid that suspends the IONPs. Coprecipitation and thermal decomposition are the main methods used for the synthesis of IONPs. Despite the fact that thermal decomposition provides precise control on the nanoparticle size, coprecipitation is the most used method, even when the oxidation of iron can occur. This oxidation alters the ratio of maghemite/magnetite, influencing the magnetic properties of ferrofluids. Strategies to overcome iron oxidation have been proposed, such as the use of an inert atmosphere, adjusting the Fe(II) and Fe(III) ratio to 1:2, and the exploration of other metals with the oxidation state +2. Surfactants and carrier liquids are chosen according to the ferrofluid application to ensure stability. Hence, a compatible carrier liquid (polar or nonpolar) is selected, and then, a surfactant, mainly a polymer, is embedded in the IONPs, providing a steric barrier. Due to the variety of surfactants and carrier liquids, the rheological properties of ferrofluids are an important response variable evaluated when synthesizing ferrofluids. There are many reported applications of ferrofluids, including biosensing, medical imaging, medicinal therapy, magnetic nanoemulsions, and magnetic impedance. Other applications include water treatment, energy harvesting and transfer, and vibration control. To progress from synthesis to applications, research is still ongoing to ensure control of the ferrofluids’ properties.