In this study, MREs based on natural rubber and carbonyl iron were prepared. The Taguchi method was utilised to study the effect of a number of dominating factors during the fabrication process, namely, pre-curing time, pre-curing temperature and applied magnetic field on the microstructure and tensile properties of MREs. Tensile properties were measured with a universal tensile testing machine. It was found that the pre-curing temperature had the greatest influence on ultimate tensile strength and elongation at break. Morphology characteristics of MREs were examined using scanning electron microscopy. The results revealed that isotropic MREs cured without an applied magnetic field had a homogenous carbonyl iron particle distribution in the rubber matrix, and that applying a magnetic field at elevated temperature allowed the particles to organise into chain-like columnar structure in anisotropic MREs.