An efficient, low-cost and environmental-friendly method to fabricate magneto-active fabrics (MAFs) based on cotton fibers soaked with silicone oil and iron oxide microfibers (mFe) at mass fractions 2 wt.%, 4 wt.% and 8 wt.% is presented. It is shown that mFe induce good magnetic properties in MAFs, which are subsequently used as dielectric materials for capacitor fabrication. The electrical properties of MAFs are investigated in a static magnetic field with intensities of 0 kA/m, 160 kA/m and 320 kA/m, superimposed on a medium-frequency electric field. The influence of mFe on the electrical capacitance and dielectric loss tangent is determined, and it can be observed that the electrical conductivity, dielectric relaxation times and magnetodielectric effects are sensibly influenced by the applied magnetic and electric fields. The results indicate that the MAFs have electrical properties which could be useful for protection against electromagnetic pollution or for health monitoring.