This study investigates the effect of particle concentration on tuneable magneto-optical transmittance and optically induced refractive index coefficients in Fe3O4-based nanomagnetic fluid (NMF) at room temperature. A static magneto-optical experimental setup was devised to investigate the magneto-optical effects arising from variations in particle concentration and dipolar interactions, under varying magnetic fields. In this work, Fe3O4-based nanomagnetic fluid was synthesized using a chemical co-precipitation method. The structural, morphological, and magnetic properties of the fluid were investigated using sophisticated characterization techniques including x-ray diffraction (XRD), high-resolution transmission electron microscopy (HRTEM), and vibrating-sample magnetometry (VSM). Our investigation focused on the tunability of magneto-optical transmittance as a function of the varying magnetic field at different particle concentrations. Further, we observed variations in diffraction fringes in the nanomagnetic fluid, correlating with particle concentration, by passing a high-power laser through the diluted fluid system. Light–matter interaction in the presence of a varying magnetic field induces optical anisotropy in the fluid, whereas dipole–moment interaction and magnetic particle alignment in the presence of a magnetic field are the main supporting phenomenon of magneto-optical tunability in our experiment. Experimental modulation of the transmittance profile and field-induced refractive index coefficients in NMF, elucidated through fringe diffraction, has potential for applications such as tuneable magneto-optical devices, optical filters, and optical limiters.