This paper is focused on the experimental and theoretical study of the phase separation of a magnetic nanoparticle suspension under rotating magnetic field in a frequency range, 5 ≤ ≤ 25 Hz, relevant for several biomedical applications. The phase separation is manifested through the appearance of needle-like dense particle aggregates synchronously rotating with the field. Their size progressively increases with time due to the absorption of individual nanoparticles (aggregate growth) and coalescence with neighboring aggregates. The aggregate growth is enhanced by the convection of nanoparticles towards rotating aggregates. The maximal aggregate length, ∝ −2 , is limited by fragmentation arising as a result of their collisions. Experimentally, aggregate growth and coalescence are occurring at a similar timescale, ~1 min, weakly dependent on the field frequency. The proposed theoretical model provides a semi-quantitative agreement with the experiments on average aggregate size, aggregation timescale and size distribution function, without any adjustable parameter.