This paper attempts to fill the gap in the literature by introducing and discussing an enhanced physical model of the MR damper. The essence of the presented model is to combine the effect of compressibility of the MR fluid enclosed in each chamber with the effect of blocking the flow between the chambers in the case of a low pressure difference. As it will be shown, the concurrence of both considered phenomena significantly affects mechanical behaviour of the damper, influences its dissipative characteristics, and in particular, it is the reason behind the distinctive 'z-shaped' force-velocity hysteresis loops observed in experiments. The paper presents explanation of the observed phenomena, detailed derivation of the thermodynamic equations governing response of the damper, their implementation for various constitutive models of the magnetorheological fluid and, finally, formulation of the corresponding reduced and parametric models. Experimental validation shows that proper identification of physical parameters of the proposed mathematical model yields the correct shapes of force-velocity hysteresis loops. (C) 2017 Elsevier Inc. All rights reserved.