Rheological experiments on relaxation of shear stress in a diluted ferrofluid with clustered iron oxide nanoparticles ( ϕ = 0.1 vol%) have been performed. Changes of the stress appearing in the fluid at constant magnetic field strength after a stepwise change of shear rate γ · have been measured. It has been found that the time of the transient, until the shear stress in the fluid will be steady, depends strongly on the strength of the applied magnetic field and shear rate. For vanishing magnetic field slow relaxation has not been observed. The time of the transient in the presence of a magnetic field can reach several minutes. The change of the transient viscosity η t = 1 / γ · ( γ · ) as a function of the steady viscosity η t → ∞ ( γ · ) shows a linear behavior and depends on magnetic field strength. Those effects can be attributed to the process of structure formation and destruction due to the simultaneous action of an applied magnetic field and shear flow. A similar behavior is known from the rheology of complex fluids like polymer melts or aggregating colloids. We propose a model of the rheological effects based on the assumption that the clusters form linear chains which size distribution is determined by applied magnetic field and shear rate.