The polarization of a D-shaped fiber is modulated after immersing it in magnetic fluid (MF) and applying a magnetic field. Theoretical analysis predicts that magneto-optical dichroism of MF plays a key role in light polarization modulation. During light polarization modulation, the evanescent wave polarized parallel to the magnetic field has greater loss than its orthogonal component. Light polarization of a D-shaped fiber with a wide polished surface can be modulated easily. High concentration MF and a large magnetic field all have great ability to modulate light polarization.