This article describes the fabrication of the NiTi nanofluid using pure titanium and nickel rods as the anode and cathode electrodes, respectively, to further investigate the submerged arc nanofluid synthesis system the authors have developed. Using this kind of nanofluid, this article tests and analyzes the magnetic and photocatalytic properties of the nanofluid. The fabricated NiTi nanofluid has a pH value of 7, but the Brunauer, Emmett, and Teller surface area of the NiTi nanoparticles reaches 92.3 m(2)/g. Furthermore, this nanofluid can maintain a long-term and stable suspension status for more than six months. Testing of the NiTi nanofluid magnetism by superconducting quantum interferences device magnetometer indicates that paramagnetism appears in these nanoparticles. The saturated magnetization strength of NiTi nanoparticles is 2355 Oe, and their saturated magnetization is 0.72 emu/g in average, which is over 11 times the bulk. After oxidization of the NiTi nanofluid, NiTiO3 is formed, and its energy gap is 4.9 eV. In the photocatalysis experiment the NiTiO3 nanofluid has better photodecomposition ability for methylene blue than the general TiO2 nanoparticles for commercial use. (c) 2007 American Vacuum Society.