This study evaluated the demulsifying capability of magnetic nanoparticles for industrial wastewater treatment and the solid effect during demulsification. In order to evaluate the demulsification capability of magnetic nanoparticles, an oleic acid-coated magnetite (Fe3O4@OA) was used as a demulsifier for demulsification of diluted waste cutting fluid (DWCF) rom machining and manufacturing. The effects of the magnetic nanoparticles dosage (CS), the pH, cetyltrimethyl ammonium bromide (CTAB) and electrolytes (NL and CL) in DWCF on the demulsification efficiency (ED) were investigated. It was observed that the ED enhanced when electrolytes NL and CL were added into DWCF and decreased with pH increasing. Meanwhile, in the magnetic demulsification systems, a significant solid concentration effect (or CS-effect) was observed, that is the equilibrium adsorption amount (Γe) declined as CS increased. These CS-effect data can be explained using the surface component activity (SCA) model. The CS-effect strength (or γ value) declined in turn with the NL, CL and CTAB added and declined with pH increasing. The paper further discusses the rationale for the observed results. This paper provides a new perspective on magnetic demulsification and demonstrates that SCA model can be applied to describe the CS-effect phenomenon exactly in magnetic demulsification systems.