The dc field rheological properties and frequency dependent dielectric properties of a set of electrorheological (ER) fluids composed of oxidized polyacrylonitrile or aluminosilicate materials dispersed in silicone oil were examined in this paper. Our experimental investigations show that there is a complicated relationship between the dielectric properties of dispersed particles and the ER effect. The dielectric loss of dispersed particles, which has not attracted much attention in previous work, was found to play a considerable role in ER response. The large dielectric loss tangent, experimentally around 0.10 at 1000 Hz, is found to be needed for a strong ER effect. A good ER solid material should first have large dielectric loss, and then the higher the dielectric constant, the stronger the ER effect. The large dielectric loss would facilitate the turning of dispersed particles, and the high dielectric constant would maintain the fibrillation structure stable and strong. Two processes, the particle turning process and the particle polarization process, are thought to be involved in ER activity. Our findings, in connection with the Wagner model, can better explain why the strongest ER effect occurs at particle conductivity of 10(-7) S/m; why the shear stress of some ER fluids decreases with frequency while with others the shear stress increases with frequency; and why trace water can enhance the ER effect considerably, which would help in understanding the mechanism of the ER effect. Too large a dielectric loss is thought to be unfavorable for the ER effect, and its suitable range is worth further study. The results also present a method of designing high performance ER fluids, which would significantly promote development of electrorheology and its application in industrial areas.