Magnetorheological (MR) fluids are a new type of smart material whose performance can be evaluated by considering three important factors: stability, viscosity, and shear yield stress of the fluids. In this study, to produce fine, antisettling, and well-dispersed MR fluids, appropriate components and preparation techniques were adopted and a surface treatment method was developed involving different surfactants. Property tests of the MR fluids were conducted, and the results demonstrated that the proposed preparation method decelerated the sedimentation of MR fluids, that the viscosity of the MR fluids varied with temperature and shear rate, and that liquid paraffin can reduce the viscosity of the MR fluids more gradually than oleic acid. In addition, variations in shear yield stress with magnetic induction intensity and volume fraction were determined. To accurately describe the shear yield stress of the MR fluids, a limited chain model that considers the spatial distribution of carbonyl iron (CI) particles, model size, and magnetic saturation phenomenon was proposed. A comparison between the theoretical and experimental values obtained in this study indicates that a seventh-order limited chain model can effectively calculate the shear stress of MR fluids. (C) 2014 American Society of Civil Engineers.