Molecule-based electrorheological (ER) materials with luminescence property, based on β-cyclodextrin [(C6O5H10)7, β-CD] inclusion compounds between β-CD (host) and the rare earth (RE) (RE=Tb, Eu) complex (guest), have been synthesized as a novel type of ER materials using β-CD, Tb(NO3)3, Eu(NO3)3, sulphosalicylic acid (C7H6O6S·2H2O, SSA) and m-phthalic acid (C8H6O4, MPA) as original materials. The composition, ER performance, luminescence property and dielectric property of the materials have been studied. The results show that the rare earth complex in the cavity of β-CD may enhance the ER performance of β-CD, and the complex (Tb-SSA) of Tb3+ can improve more effectively the ER activity of β-CD than that (Eu-MPA) of Eu3+ among both of the complexes. The composition and structure are the dominant factors in improving the ER effect. The fluorescence intensity, fluorescence lifetime and emission quantum yield of the particle materials and their suspensions in silicone oil have been tested, and fine luminescence performance has been detected. The material with ER activity and luminescence performance is a novel multifunctional material which would have wide application prospect.