This work presents the design, assembly and automation of a Faraday experiment for use in characterization of the magneto-optical response of fluids and ferrofluids. The magneto-optical Faraday experiment was automated using programmable equipment, controlled through the IEEE-488 port via Standard Commands for Programmable Instruments executed from a graphical interface developed in LabVIEW software. To calibrate the system the Verdet constants of distilled water and isopropyl alcohol were measured, obtaining an error percentage less than 2% for both fluids. Subsequently we used the system for measuring the Verdet constant of a ferrofluid of iron oxide nanoparticles diluted in distilled water, which was synthesized and, before its dilution, characterized by scanning electron microscopy, room temperature Mössbauer spectroscopy and vibrating sample magnetometry. We found that the Verdet constant of the diluted ferrofluid was smaller than that of distilled water, indicating opposite contributions of the effects of the diamagnetic and paramagnetic phases present in the ferrofluid to the magneto-optical effect. Details of the assembly, control of the experiment and development of the measurements are presented in this paper.