Both experiment and numerical calculation were performed to study the nonlinear optical (NLO) effects in ferrofluids consisting of magnetic particles suspended in an organic solvent. We show that, in contrast to all the mechanisms responsible for NLO phenomena known so far, the novel NLO effects in ferrofluids in the zero applied field can be explained by the cross coupling between the temperature of the system and the concentration of particles throughthermophoresis, which in turn leads to the spatial distribution of the refractive index. This NLO effect is enhanced by applying a moderate magnetic field whose mechanism is unclear so far. ©1998 American Institute of Physics.