We investigate magnetic-field-induced changes on transmitted light intensity in a magnetic disordered phase of iron oxide nanoparticle suspension. We observe a dramatic decrease in the transmitted light intensity at a critical magnetic field. The critical magnetic field follows power-law dependence with the volume fraction of the nanoparticles suggesting a disorder-order structural transition. The light intensity recovers fully when the magnetic field is switched off. We discuss the possible reasons for the reduction in the light intensity under the influence of magnetic field. Among the various mechanisms such as Kerker's condition for zero forward scattering, Faraday effect, Christiansen effect, photoinduced refractive index mismatch between the two components of the dispersion, etc., the resonances within the magnetic scatterers appear to be the plausible cause for the extinction of light. The circular pattern observed on a screen placed perpendicular to the incident beam confirms the formation of rodlike structures along the direction of propagation of the light.