Magnetorheological (MR) fluids are a talk of the day due to their potential applications in various fields. In the present work, six different MR fluids were prepared based on the variation in the percentage of carbonyl iron (CI) particles and carrier liquid. The smart material CI particle was well characterized by XRD, SEM-EDAX and VSM measurements. The effect of carrier fluid on sedimentation was tested using CI 50% and compared with the other carrier oil used. The Magnatec oil acts as a better candidate due to its sedimentation stability and thermal resistance. Therefore, the rheological measurement was examined for the three magnetorheological fluids (MRF) prepared, namely MRF 32, MRF 50 and MRF 80 with Magnatec oil as carrier liquid. The three various size annular gaps between the piston and the inner cylinder casing was also studied. Among the three variations, 1, 1.5 and 2 mm, the maximum damping force was obtained for 1-mm annular gap. A number of experimentations were carried out to investigate the performance of the MR fluid as well as the annular gap. Cyclic load test was performed with various annular gaps, and 0.536 kN was the maximum damping force for 1-mm annular gap.