The effect of shape anisotropy of a magnetic particle on the performance and stability of the magnetorheological (MR) suspension was investigated using a rotational rheometer and a vibrating sample magnetometer. A flaky Sendust (FS) suspension demonstrated surprisingly high MR performance at low magnetic field strength because of the shape anisotropy effect which induced a rapid ascent of the particles' magnetic moment and, thus, suspension's high yield stress. Despite its lower iron content (85%) than carbonyl iron (almost pure iron), the Sendust suspension exhibited a yield stress value greater than that of the carbonyl iron suspension at low magnetic field strength. Because of the low demagnetization factor in a nonisometric Sendust particle, the alloy particles were easily magnetized along the easy axis direction, which led to an unexpectedly high yield stress of the suspension at a low magnetic field strength. At a high magnetic field strength, all of the tested suspensions of flaky Sendust, bulk Sendust (BS), and carbonyl iron (CI) displayed similar MR behaviors but different yield stress values. The highest yield stress value at high magnetic field strength was that of the carbonyl iron suspension, followed by those of the FS suspension and the BS suspension; however, the difference between the yield stress values of the two Sendust suspensions was not substantial. A master curve for different MR fluids was obtained by plotting dimensionless viscosity as a function of the shear rate and the square of the magnetic field strength, which indicates that the particle suspensions exhibited similar responses to the external magnetic stimuli. Though the density of FS is larger than the bulk Sendust, the FS suspension demonstrates remarkably improved stability compared with the CI suspension or the BS suspension because of the large drag coefficient of the flaky Sendust particles.