The dielectric property and magneto-optical effects of ferrofluids have been investigated in the terahertz (THz) regime by using THz time-domain spectroscopy. The experiment results show that the refractive index and absorption coefficient of ferrofluid for THz waves rise up with the increase of nanoparticle concentration in the ferrofluid. Moreover, two different THz magneto-optical effects have been found with different external magnetic fields, of which mechanisms have been theoretically explained well by microscopic structure induced refractive index change in the magnetization process and the transverse magneto-optical effect after the saturation magnetization, respectively. This work suggests that ferrofluid is a promising magneto-optical material in the THz regime which has widely potential applications in THz functional devices for THz sensing, modulation, phase retardation, and polarization control.