The effect of the molecular weight of poly(ethylene glycol) (PEG) on the physical properties of water-based magnetic fluids with sodium oleate and PEG stabilization was investigated. The structure as well as magnetic, rheological, and thermal properties of the obtained samples were studied using transmission electron microscopy (TEM), photon cross correlation spectroscopy (PCCS), superconducting quantum interference device (SQUID), and differential scanning calorimetry (DSC) methods. The molecular weight of PEG had a strong effect on the rheological properties while the effect was rather insignificant on the particle size distribution and the self-heating of the studied magnetic fluids. The heating ability of the PEG-stabilized magnetic fluids was determined by calorimetric measurements of the specific absorption rate (SAR). The thickness of the PEG layer was calculated from the experimental data of the temperature rise rates as a function of the magnetic field strength using the Rosensweig theory.