The work aims to prepare a new type of magnetic abrasive in order to overcome insufficient bonding of agglutinant to grain phase. With carbon steel balls as ferromagnetic phase, diamond powder as grain phase and chemical nickel plate as agglutinant, the iron-based diamond magnetic abrasive was prepared by combining chemical composite plating and barrel plating. The surface morphology and elemental composition of magnetic abrasive were analyzed by scanning electron microscope (SEM). Crystalline structure of the coating at different heat treatment temperatures was detected by X-ray diffractometer. Hardness and binding force were measured by Vickers hardness tester and WS-2005 coating adhesion scratch tester. The effect of ferromagnetic phase and abrasive grains with different grain diameters on processability of magnetic abrasive was studied in case of 45 steel flat machining. Diamond powder was found to be deposited and uniformly distributed on the whole plating surface and no agglomeration was detected when the surface morphology of magnetic abrasive was observed by scanning electron microscope. According to EDS energy spectrum diagram, the plating was mainly composed of three elements of Ni, P and C. Vickers hardness of the plating was up to 805.12HV (maximum) at the heat treatment temperature of 400 ℃ and the binding force between plating and iron substrate was 130 N. In the magnetic grinding machining experiment, the surface roughness and material removal rate related to the grain size of grain phase and ferromagnetic phase. In addition, the surface roughness of workpiece dropped to 0.11 μm (minimum). The hardness and binding force of the prepared spherical magnetic abrasive are good and the processability of magnetic grinding is excellent.