This paper reports a biocompatible and label-free cell separation method using ferrofluids that can separate a variety of low-concentration cancer cells from cell culture lines (∼100 cancer cells per mL) from undiluted white blood cells, with a throughput of 1.2 mL h-1 and an average separation efficiency of 82.2%. The separation is based on the size difference of the cancer cells and white blood cells, and is conducted in a custom-made biocompatible ferrofluid that retains not only excellent short-term viabilities but also normal proliferations of 7 commonly used cancer cell lines. A microfluidic device is designed and optimized specifically to shorten the time of live cells' exposure to ferrofluids from hours to seconds, by eliminating time-consuming off-chip sample preparation and extraction steps and integrating them on-chip to achieve a one-step process. As a proof-of-concept demonstration, a ferrofluid with 0.26% volume fraction was used in this microfluidic device to separate spiked cancer cells from cell lines at a concentration of ∼100 cells per mL from white blood cells with a throughput of 1.2 mL h-1. The separation efficiencies were 80 ± 3%, 81 ± 5%, 82 ± 5%, 82 ± 4%, and 86 ± 6% for A549 lung cancer, H1299 lung cancer, MCF-7 breast cancer, MDA-MB-231 breast cancer, and PC-3 prostate cancer cell lines, respectively. The separated cancer cells' purity was between 25.3% and 28.8%. In addition, the separated cancer cells from this strategy showed an average short-term viability of 94.4 ± 1.3%, and these separated cells were cultured and demonstrated normal proliferation to confluence even after the separation process. Owing to its excellent biocompatibility and label-free operation and its ability to recover low concentrations of cancer cells from white blood cells, this method could lead to a promising tool for rare cell separation.