Carbonyl iron (CI) based magnetorheological (MR) fluid systems possess some disadvantages including severe sedimentation of the CI particles due to their large density mismatch with the carrier liquid and difficulties in redispersion after caking. In order to not only prevent sedimentation but also enhance re-dispersion of pure magnetic CI particles in MR fluid, hybrid magnetic particles of CI/poly(methyl methacrylate) (PMMA) were prepared via a suspension polymerization method of methyl methacrylate. Since the composite particles of CI-PMMA have a lower density than that of pure CI particles, they are regarded to improve the sedimentation problem of magnetic particles in the MR fluid. Both CI and CI-PMMA particles were dispersed in mineral oil (20 vol%) and their MR characteristics were examined via a rotational rheometer with a magnetic field supplier. Various characterizations of the CI-PMMA particles were performed via SEM and FT-IR. Shear stress as a function of shear rate of the MR fluid was investigated under magnetic field strengths exhibiting typical MR performance.