The synthesis and characterization of isotropic magnetorheological elastomer (MRE) with significantly enhanced utility properties is presented. Common drawbacks of classical MREs, such as poor particle wettability, dispersibility, low thermooxidative stability, low chemical stability, and insufficient durability, were eliminated by grafting the carbonyl iron (CI) particles with poly(trimethylsilyloxyethyl methacrylate) (PHEMATMS) using surface -initiated atom transfer radical polymerization (ATRP). Two sets of the MREs were prepared containing bare CI and CI grafted with PHEMATMS chains (CI-gPHEMATMS). The effects of the coating on magnetorheological behavior in oscillatory shear, as well as the sensing properties of the prepared MREs, were evaluated. The mechanical properties in tensile mode and the particle filler/polydimethylsiloxane (PDMS) matrix interactions were investigated using a dynamic mechanical analysis. The PHEMATMS grafts considerably improved the CI particles' mobility, probably by preventing a partial cross -linking with the PDMS matrix. Besides the plasticizing effect, the MRE containing CI-g-PHEMATMS exhibited moderate mechanical performance and a slightly improved relative magnetorheological effect, but significantly enhanced damping factor, improved magnetostriction, and provided good sensing capability, which make such material highly promising for intended practical applications.