Magnetic abrasive used for the internal finishing of capillary tubes, which prevents accumulation of contamination and erratic flow of the conveyed fluid, is a composite particle, consisting of iron and abrasive grains. The irregularity of the magnetic abrasive shape, due to the mechanical crushing process, causes nonuniform depth of cut of the abrasive and restricts the improvement of the finished surface quality. This has resulted in a narrow range of finishing performance. Moreover, the irregularity of the magnetic abrasive shape brings about difficulty in merely introducing it into capillary tubes. To break through these difficulties, this research proposes to develop a spherical iron-based magnetic abrasive, which carries grains on the surface, made by plasma spray. First, this paper examines the feasibility of the plasma spray to make the existing magnetic abrasive more spherical, and suggests the conditions needed to produce the spherical magnetic abrasive. Second, it studies the development of the new spherical magnetic abrasive made of separate particles: iron particles and abrasive grains, which carries the nonferrous abrasive on the outer surface alone. Their finishing performance, evaluated through the experiments using SUS304 stainless steel tubes, shows their applicability to magnetic abrasive finishing.