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This paper presents the modeling, simulation and testing of a novel eddy current damper (ECD) to be used in vehicle suspension systems. The conceived ECD utilizes permanent magnets (PMs), separated by iron poles that are screwed to an iron rod, and a conductive hollow cylinder to generate damping. Eddy currents develop in the conductor due to its relative motion with respect to the magnets. Since the eddy currents produce a repulsive force that is proportional to the velocity of the conductor, the moving magnet and conductor behave as a viscous damper. The structure of the new passive ECD is straightforward and does not require an external power supply or any other electronic devices. An accurate, analytical model of the system is obtained by applying electromagnetic theory to estimate the electromagnetic forces induced in the system. To optimize the design, simulations are conducted and the design parameters are evaluated. After a prototype ECD is fabricated, experiments are carried out to verify the accuracy of the theoretical model. The heat transfer analysis is established to ensure that the damper does not overheat, and the demagnetization effect is studied to confirm the ECD reliability. The eddy current model has 1.4 N RMS error in the damping force estimation, and a damping coefficient as high as 53 N s m−1 is achievable with the fabricated, scaled-down prototype. Finally, a full-size ECD is designed and its predicted performance is compared with that of commercial dampers, proving the applicability of the ECD in vehicle suspension systems.