A drum type magnetic separator was designed and optimized by computer simulation. The separator consisted of rotating outer shell of drum, magnetic flux generator drum which was assembled with numbers of disk type magnet holders, and drum axis around which the magnet holders were fixed. NdFeB magnet blocks were inserted into the disks, and the disks were assembled layer by layer along the drum axis. Magnetic circuits of the separator were simulated on the basis of highest magnetic strength, least cost, and high yield of separation by using a Vector Field S/W employing the Opera-2D program. The separator proved a separation yield of 95% in removing fine iron-base particles, and installed at Hot Rolling Mill of Pohang Iron & Steel Co. In Korea.