A new electrospark deposition method (ESD), which employs a magnetized electrode to which fine powder is attracted, is proposed and studied. Unlike the traditional ESD method which employs a solid bar electrode, the electrode tip of this latest development can be regarded as a “fluidized” head formed by an assembly of coating powders. With the powder-assembled head acting like a soft brush, the electrode can closely follow the surface contours of the workpiece. For this magnetic-aided electrospark deposition method (M-ESD), the spark discharge location and the contact condition are no longer dictated by the irregular surface asperities of the solid electrode, but instead, “soft” contacts, which are self-regulating, are established between the magnetized coating powders and the workpiece surface. The experimental results showed that M-ESD was a more stable process than the traditional ESD process; moreover, the deposition weight of the former was significantly higher than that of the latter. The discharge mechanisms of these two processes were found to be different: single discharge for ESD and multiple discharges for M-ESD. This was confirmed by the discharge images captured by a high-speed camera and was supported by the results of the simulation of the electrical fields of the electrodes in the traditional ESD and M-ESD processes.