We report a real time, two-dimensional light-scattering study of the nonlinear dynamics of field-induced structures in an electrorheological (ER) fluid subjected to oscillatory shear. We have developed a simple kinetic chain model of the observed dynamics by considering the response of a fragmenting/aggregating particle chain to the prevailing hydrodynamic and electrostatic forces. This theory of the dynamics is then used to describe the nonlinear theology of ER fluids, and it is concluded that light scattering allows one to indirectly probe the stress in an ER fluid.