The core-shell structural SiO Fe O nanocomposites were prepared via hydrolysis and condensation of tetraethyl orthosilicate (TEOS) by using iron oxide nanoparticles as seeds in a 2-propanol/distilled water mixed solvent using ammonia as catalyst. The waterbased ferrofluid (FF) as 0.3 ml EMG 304 was adopted as the seed. The effects of ammonia aqueous amount, volume ratio of 2-propanol/ distilled water, TEOS amount, and reaction time on size and dispersibilty are investigated via transmission electron microscope and X-ray diffraction. Further, the linear birefringence and dichroism measurements of silica coated FF were investigated by a Stokes polarimeter. Results indicated that the appropriate reaction parameters including volume ratio of 2-propanol/distilled water of 5:1, ammonia solution volume of 0.5 ml, TEOS amount of 50 mg, and mechanical stirring of 1000 r/min for 3 h were found to obtain large retardance and low dichroism.