Active control of droplet generation in a microfluidic platform attracts interest for development of digital microfluidic devices ranging from biosensors to micro-reactors to point-of-care diagnostic devices. The present paper characterises, through an unsteady three-dimensional Volume of Fluid (VOF) simulation, the active control of ferrofluid droplet generation in a microfluidic T-junction in presence of a non-uniform magnetic field created by an external magnetic dipole. Two distinctly different positions of the dipole were considered-one upstream of the junction and one downstream of the junction. While keeping the ferrofluid flow rate fixed, a parametric variation of the continuous phase capillary number, dipole strength, and dipole position was carried out. Differences in the flow behaviour in terms of dripping or jetting and the droplet characteristics in terms of droplet formation time period and droplet size were studied. The existence of a threshold dipole strength was identified, below which the magnetic force was not able to influence the flow behaviour. It was also observed that, for dipoles placed upstream, droplet formation was suppressed at some higher dipole strengths, and this value was found to increase with increasing capillary number. Droplet time period was also found to increase with increasing dipole strength, along with droplet size, i.e. an increase in droplet volume.