This paper reports the formation and manipulation of ferrofluid droplets at a microfluidic T-junction in the presence of a permanent magnetic field. A small circular permanent magnet with a diameter of 3 mm is used to control the size of the ferrofluid droplets within a microfluidic device. In the absence of a magnetic field, the size of the ferrofluid droplets decreases linearly with the increase of the flow rate of the continuous phase. In the presence of a magnetic field, the size of the droplets depends on the magnetic field strength, magnetic field gradient and the magnetization of the ferrofluid. The magnetic field strength is adjusted in our experiment by the location of the magnet. The induced attractive magnetic force affects the droplet formation process leading to the change in the size of the formed droplets. Experimental observation also shows that the relative change in the size of the droplet depends on the flow rate of the continuous phase. Furthermore, the paper compares the evolving shape of the ferrofluid droplet during the formation process with and without the magnetic field.