Magnetic fluids (e.g., paramagnetic solutions and ferrofluids) have been increasingly used for label-free separation of nonmagnetic particles in microfluidic devices. Their biocompatibility, however, becomes a concern in high-throughput or large-volume applications. One way to potentially resolve this issue is resuspending the particles that are separated in a magnetic fluid immediately into a biocompatible buffer. We demonstrate herein the proof-of-principle of the first integration of negative magnetophoresis and inertial focusing for a simultaneous separation and washing of nonmagnetic particles in coflowing ferrofluid and water streams. The two operations take place in parallel in a simple T-shaped rectangular microchannel with a nearby permanent magnet. We find that the larger and smaller particles' exiting positions (and hence their separation distance) in the sheath water and ferrofluid suspension, respectively, vary with the total flow rate or the flow rate ratio between the two streams.