The following study investigates the microstructural changes induced by shear in dilute suspensions of colloidal Fe2O3 rods (aspect ratio = 8.4) using rheo-optic techniques. The large extinction coefficient for the hematite system at the wavelength used (lambda (max) = 392 nm) enables rheo-optic experiments on truly dilute suspensions to be undertaken. Optical absorbance spectra have been measured over a range of shear rates for unpolarized light and for light polarized relative to the shear direction. The measured absorbance changes may be attributed to the shear-induced anisotropy in the suspension. Numerical methods are used to obtain solutions of the convective-diffusion equation, which are used to predict the measured change in extinction coefficient with shear for colloidal hematite rods measured using optical rheometry.