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A novel self-aligned "soft masking" method that is compatible with traditional photolithographic processes is demonstrated. This method uses a suspension of ultra-fine iron oxide grains (ferrofluid) to protect or de-protect selected areas of a magnetically patterned substrate according to a programmable sequence. Automatic mask formation and registration is controlled by ferromagnetic alignment marks patterned on a substrate. External magnetic fields applied to the system causes ferrofluid to aggregate only over designated areas on the surface, thereby masking those areas from UV and/or chemical exposure.