This work reports an experiment/simulation combination study on the magnetorheological (MR) mechanism of magnetic fluid based on Fe3O4 hollow chains. The decrease of shear stress versus the increasing magnetic field was observed in a dilute magnetic fluid. Hollow chains exhibited a higher MR effect than pure Fe3O4 hollow nanospheres under a small magnetic field. A modified particle level simulation method including the translational and rotational motion of chains was developed to comprehend the correlation between rheological properties and microstructures. Sloping cluster like microstructures were formed under a weak external field (24 mT), while vertical column-like microstructures were observed under a strong field (240 mT). The decrease of shear stress was due to the strong reconstruction process of microstructures and the agglomeration of chains near the boundaries. The chain morphology increased the dip angle of microstructures and thus improved the MR effect under a weak field. This advantage made Fe3O4 hollow chains to be widely applied for small and low power devices in the biomedical field. Dimensionless viscosity as a function of the Mason number was collapsed onto linear master curves. Magnetic fluid in Poiseuille flow in a microfluidic channel was also observed and simulated. A qualitative and quantitative correspondence between simulations and experiments was obtained.