Composite particles (CIPMMA) of carbonyl iron (CI) and poly (methyl methacrylate) (PMMA) were prepared by a suspension polymerization method using CI dispersions in MMA monomer, and these were adopted as dispersed phase of magnetorheological (MR) fluids. The CIPMMA can resolve several problems of MR fluids having CI alone such as severe sedimentation and poor dispersion stability. Flow and viscelastic properties of the MR fluids were analyzed via a rotational rheometer equipped with a magnetic field supplier using measuring system of a parallel plate. The MR characteristics like yield stress were affected by the CI contents in the composite particles.