A carbonyliron (CI)-based magnetorheological (MR) suspension was prepared with halloysite nanoclay particles as an additive. The MR properties of the suspension were investigated using a rotational rheometer with a parallel-plate geometry equipped with a magnetic field supply under a range of external magnetic field strengths. From the sedimentation ratio test to assess the dispersion stability, the addition of halloysite particles to the CI suspension was found to improve the sedimentation problem. MR fluids containing both pure CI and CI/halloysite were employed in a custom-designed MR damper, and their damping characteristics, such as. the damping force as a function of time, displacement, and velocity, were examined experimentally because the vibration attenuation using mechanical damper systems is one of the main applications of MR fluids. Under the same magnetic field strength, the damping characteristics of the two MR fluids were found to be related directly to their yield stresses.