Chaotic mixing, induced by breakup and reformation of a magnetic chain under the influence of a rotating magnetic field, is studied. A direct simulation method combining the Maxwell stress tensor and a fictitious domain method is employed to solve flows with suspended magnetic particles. The motion of the chain is significantly dependent on the Mason number (Ma), the ratio of viscous force to magnetic force. The degree of chaos is characterized by the maximum Lyapunov exponents. We also track the interface of two fluids in time and calculate the rate of stretching as it is affected by the Mason number. The progress of mixing is visualized via a tracer particle-tracking method and is characterized by the discrete intensity of segregation. Within a limited range of Mason number, a magnetic chain rotates and breaks into smaller chains, and the detached chains connect again to form a single chain. The repeating topological changes of the chain lead to the most efficient way of chaotic mixing by stretching at chain breakup and folding due to rotational flows.