Mesoporous nanocomposite materials of magnetic iron oxide-containing MCM-41 (IO/MCM-41) were prepared by simple thermal oxidation of Fe-containing MCM-41 initially prepared by a direct synthesis route using Fe3+ salt. The magnetic saturation of the fabricated nanocomposite materials was measured using a vibrating sample magnetometer, while surface morphology and inner framework of the composite materials were studied using a field emission scanning electron microscope and a transmission electron microscope to confirm their mesoporous nanocomposite formation. The fabricated magnetic materials were then adopted as a magnetorheological (MR) fluid, where the IO/MCM-41 magnetic nanocomposites were dispersed in a nonmagnetic medium oil in addition to as an additive for carbonyl iron-based MR fluid. Their MR properties of flow curve along with yield stress and viscoelastic properties under applied magnetic fields were investigated using a rotational rheometer.