The structure and dynamics in a monolayer of dipolar soft spheres have been investigated using molecular dynamics simulations. This is a basic model of colloidal ferrofluid monolayers, and other magnetic liquids in planar geometries, which can exhibit self-assembled chainlike aggregates due to strong dipole-dipole interactions. The effects of such chaining on the structure, single-particle translational and rotational motions, and the collective rotational motions are examined. The signatures of aggregation in the various structural and dynamical functions considered in this study could prove useful in experimental investigations of strongly dipolar materials. (C) 2004 American Institute of Physics.