Magnetorheological (MR) fluids are magnetic field dependent fluids used in the semi-active damping systems. MR fluids usually consist of magnetic particles dispersed in a carrier liquid. In this work, five different carbonyl iron and magnetite-based MR fluids were prepared with various iron concentrations in silicone oil. The fumed silica was used as an additive to reduce sedimentation of the carbonyl iron particles. Performance of the MR fluids was tested by using the prototype of MR damper designed and manufactured in accordance with the dimensions of a passenger car's shock absorber. Sedimentation stability which affects the performance of the MR fluids was also observed. The effects of particle type, concentration and fumed silica on the damping performance of the MR fluids were evaluated. The results showed that when the current is increased up to 2 amps, the damping force is increased by 40% for the MR fluid containing 40% carbonyl iron and 2% fumed silica by mass.