An improved color changing correction fluid is provided which includes either a volatile base or a volatile acid in combination with a color changing pH indicator, all in a water based fluid or system. As the fluid dries, the volatile base or acid evaporates along with the water and the pH color changing indicator changes from a colored state to a clear state. For white paper, a white pigment is utilized and therefore the fluid changes from a colored state to a white finished state as the solvent water and acid or base evaporates. Different color pigments can be utilized to match the color of the particular paper or substrate.