Biopolymeric Arabic gum (AG) coated carbonyl iron (CI) particles were synthesized using a solvent casting process, and then their coating was confirmed using scanning electron microscopy analysis. Thermal property and chemical structure of the produced AG coated CI particles were investigated by thermalgravimetric analysis and Fourier transform infrared spectroscopy. In addition, from the measurement using vibration sample magnetometer, magnetic properties including saturation magnetization were also observed. The magnetorheological (MR) fluid was prepared by dispersing CI/AG particles in silicone oil and then its typical MR behaviors of shear stress and shear viscosity were compared to those of the pure CI suspension. Sedimentation stability of the CI/AG based MR suspension was observed to be improved compared to that of the pure CI suspension according to the Turbiscan test.