Abstarct: Photovoltaic cells are consist of semiconductor materials which directly convert the solar radiation into electricity. All of the incident radiation could not to be converted to the electricity and change into the heat. Increasing the cell temperature decreases the open circuit voltage which causes a drop of electricity conversion efficiency. One remedy to avoid the temperature increase of the PV system is the use of a photovoltaic-thermal hybrid solar system (or PVT) where the unfavorable absorbed heat from the cells is collected through an additional thermal unit. Therefore, a PVT system consists of photovoltaic and solar thermal components which produce both electricity and heat from one integrated component and improve the overall efficiency of the system. In this study, the effects of ferrofluids as a coolant on the overall efficiency of a PVT (photovoltaic thermal unit) system are experimentally investigated. The fluids considered in the experiment are distilled water and a ferrofluid (Fe3O4-water) with 1% and 3% concentrations by weight (wt%). The experiments were performed in indoor conditions under two constant solar radiations (1100 W/m2 and 600 W/m2) using a solar simulator. Due to the unique characteristic behavior of ferrofluids, their rheological and thermophysical properties can be changed under an external magnetic field. The ferrofluids in this study were placed under constant and alternating magnetic fields in the cooling section in order to investigate the effect of both types of magnetic fields on the overall efficiency of a PVT system. The results show that by using a 3 wt% ferrofluid, the overall efficiency of the system improved by 45% and when an alternating magnetic field with 50 Hz frequency was applied, the overall efficiency increased to about 50% compared to that of the distilled water as coolant fluid. It is also observed that using a constant magnetic field for a ferrofluid has almost no effect on the system performance and is very close to that of the system when no field is applied. It was observed that by adding a thermal collector to a PV system and using a 3 wt% ferrofluid under an alternating magnetic field with freqency of 50 Hz, the total exergy can be increased as high as 48 W while this amount for distilled water and PV system with no collector were 33 W and 20 W, respectively.