In this paper, the nonlinear squeeze-film damping (SFD) involving rarefied gas effect in the micro-electro-mechanical systems (MEMS) is investigated. Considering the motion of structures (beam, cantilever, and membrane) in MEMS, the dynamic response of the structure is affected greatly by the SFD. In the traditional model, a viscous damping assumption that the damping force is linear with the moving velocity is used. As the nonlinear damping phenomenon is observed for a micro-structure oscillating at a high velocity, this assumption does not hold and will cause error results for predicting the response of the micro-structure. Meanwhile, due to the small size of the device and the low pressure of the encapsulation, the gas in MEMS is usually rarefied gas. Therefore, to correctly predict the damping force, the rarefied gas effect must be considered. To study the nonlinear SFD problem involving the rarefied gas effect, a kinetic method, i.e., discrete unified gas kinetic scheme (DUGKS), is introduced in this paper. Also, based on the DUGKS, two solving methods, i.e., a traditional decoupled method (Eulerian scheme) and a coupled framework (arbitrary Lagrangian-Eulerian scheme), are adopted. With these two methods, two basic motion forms, i.e., linear (perpendicular) and tilting motions of a rigid micro-beam, are studied under forced and free oscillations. For a forced oscillation, the nonlinear SFD phenomenon is investigated. For a free oscillation, in the resonance regime, some numerical results at different maximum oscillating velocities are presented and discussed. Besides, the influence of oscillation frequency on the damping force or torque is also studied, and the cause of the nonlinear damping phenomenon is investigated.