In this paper, a new linear magnetic gear with multiple gear ratios is proposed. Unlike the conventional linear magnetic gears, the proposed one purposely utilizes the aluminum-nickel-cobalt (AlNiCo) permanent magnets (PMs) as the excitation source. Due to the relatively low coercivity, AlNiCo PMs can be magnetized or demagnetized by applying an appropriate DC current pulse into the magnetizing winding. Thus, the pole-pair numbers of PMs on two movers can be varied accordingly so that different gear ratios can be achieved. Firstly, the mathematical modeling of the hysteresis loop of AlNiCo PMs is established. Then, the proposed linear magnetic gear with adjustable gear ratios is presented. Instead of the traditional surface-mounted PM configuration, the proposed machine installs the PMs using the surface-inset and consequent-pole configuration. Hence, the adverse influence during the magnetizing or demagnetizing process can be minimized. Since the magnetizing windings are placed in the movers, no position control is required for the magnetizing or demagnetizing process. By applying finite element analysis, the electromagnetic performances of the proposed linear magnetic gear with adjustable gear ratios are evaluated. Finally, the proposed linear magnetic gear is applied for direct-drive wave energy extraction. Owing to the capability of adjustable gear ratios, the wave energy converter can be operated in resonance with the waves at different sea states so that the maximized power can be captured.