An ultrasensitive magnetic field sensor based on a compact in-fiber Mach–Zehnder interferometer (MZI) created in twin-core fiber (TCF) is proposed, and its performance is experimentally demonstrated. A section of TCF was spliced between two sections of standard single-mode fibers, and then a microchannel was drilled throughone core of the TCF by means of femtosecond laser micromachining. The TCF with one microchannel was then immersed in a water-based Fe3O4 magnetic fluid (MF), forming a direct component of the light propagation path, and then sealed in a capillary tube, achieving a magnetic sensing element, which merges the advantages of an MZI with an MF. Experiments were conducted to investigate the magnetic response of the proposed sensor. The developed magnetic field sensor exhibits a linear response within a measurement range from 5 to 9.5 mT and an ultrahigh sensitivity of 20.8 nm/mT, which, to our best knowledge, is 2 orders of magnitude greater than other previously reported magnetic sensors. The proposed sensor is expected to offer significant potential for detecting weak magnetic fields.