A Lattice Boltzmann model is developed to account for the competition betwe
en surface tension and dipolar interaction in magnetic fluids. The descript
ion of the interactions was kept as simple as possible to identify and isol
ate the nature of the essential interactions in the examined situations. Th
e model is used thereafter in order to simulate the deformation of a magnet
ic fluid drop under the action of an external magnetic field, as well as th
e onset of the normal field instability in magnetic fluids. The success of
the model, and easily identified deviations, demonstrate that the model is
a powerful and versatile tool for the study of magnetic and nonmagnetic flu
id systems with interfaces.