The effect of internal heat generation on the onset of Benard-Marangoni convection in a horizontal ferrofluid layer heated from below in the presence of a uniform vertical magnetic field is studied. The lower boundary is rigid and the upper free boundary is assumed to be flat and undeformable. Both the boundaries are considered to be perfectly insulated to temperature perturbations and the resulting eigenvalue problem is solved numerically using the Galerkin technique as well as analytically by regular perturbation technique with wave number as a perturbation parameter. It is observed that the analytical results agree well with those obtained numerically. It is noted that the combined effect of magnetic Rayleigh number and dimensionless internal heat source strength is to reinforce together and to hasten the onset of BenardMarangoni ferroconvection compared to their presence in isolation. In addition, the nonlinearity of fluid magnetization is found to have no influence on the criterion for the onset of ferroconvection. Some existing results are reproduced as particular cases from the present study.