In this paper, a magnetically controlled multifunctional smart material system based on magneto-sensitive shear thickening fluid (MSTF) is proposed for the safety-enhanced lithium-ion battery (LIB) modules. The rheological behavior of the MSTF can be intelligently manipulated by a magnetic field, allowing its function in the battery module to be actively and rapidly switched between cooling and impact resistance. To quantitatively assess the temperature control and impact resistance of the purposely prepared MSTF, comprehensive experiments are conducted to thoroughly analyze the thermal performance, mechanical response, and electrochemical performance of the battery module integrated with cooling and active impact protection. The results of the cooling test show that the water-based MSTF without a magnetic field has a flowability that gives it similar temperature control to that of a commonly used coolant (water). This suggests that the MSTF can be an effective cooling medium for rapid cooling of LIBs. The results of the impact test indicate that MSTF in a magnetic field can completely avoid battery deformation and significantly reduce the impact force applied to the LIB during impact, due to the fact that the magnetic field can quickly transform the MSTF into a solid-like state, which gives it a significant anti-impact effect. More importantly, the LIBs protected by the MSTF exhibit no rapid capacity degradation or abnormal temperature increase in the subsequent electrochemical cycling tests, while the unprotected or weakly protected LIBs compromise after the impact. With the MSTF, excellent cooling and anti-impact functions can be actively switched in one system, and this innovative integrated design is expected to drive significant advances in safety for battery modules.