This research is focused on the development of a new magnetorheological (MR) fluid which contains maghemite (γ-Fe2O3) nanoparticles so as to improve its performance. The performance of MR fluid is presented in terms of physical and rheological properties and its application in MR device. In this work, the γ-Fe2O3 has been synthesized using co-precipitation method and coated with oleic acid. Two types of MR fluids were prepared, bidisperse MR fluid containing carbonyl iron (CI) microparticles substituted with γ-Fe2O3 and MR fluid utilizing γ-Fe2O3 additive. MR fluid containing γ-Fe2O3 showed great improvement exhibiting reduced sedimentation rate and enhanced re-dispersibility. During the period of 50 hours, the bidisperse MR fluid with 5 wt% of γ-Fe2O3 reduced 15% of sedimentation rate and MR fluid with 1 wt% of γ-Fe2O3 additive reduced 9.6% of sedimentation rate compared to pure CI MR fluid. The rheological properties of the MR fluid were analyzed with respect to the rheological models of Bingham Plastic, Herschel Bulkley and Casson models. The rheological properties of bidisperse MR fluid revealed that the substitution of 5 wt% γ-Fe2O3 increased the yield stress by 8.5% but further substitution of γ-Fe2O3 would slightly decrease the yield stress. On the other hand, the MR fluid added with γ-Fe2O3 additive showed improvement in yield stress over the entire range of magnetic field applied. The results indicated that the addition of 1 wt% of γ-Fe2O3 in MR fluid increased the yield stress by 11.7%. The performance of MR fluid using MR valve equipped with a hydraulic bypass damper resulted in improvement of damping force when γ-Fe2O3 is added. The MR fluid with 1 wt% γ-Fe2O3 additive improved the maximum damping force up to 11.1% compared to the pure MR fluid. Therefore, the substitution and addition of γ-Fe2O3 nanoparticles in the MR fluid improved both its physical and rheological properties, hence it can potentially be used in commercial application as a simple and reliable damping device
