Smart materials properties are altered using external stimuli such as temperature, pressure and magnetic field. Magnetorheological Elastomer (MRE) is a type of smart composite material consisting of a polymer matrix embedded with ferromagnetic particles. In the presence of an external magnetic field, its mechanical properties, such as stiffness, change due to the interaction between the magnetic particles, which have applications in vibration isolation. Unwanted vibration in machines can cause severe damage and machine breakdown. In this work, a semi-active vibration isolator using MRE is proposed for a potential application in a drilling system to isolate the torsional vibration. The MRE was fabricated with a 35% mass fraction (MF) consisted of silicon rubber and iron particles. It was fitted with aluminium couplers and attached to the shaft (drill string) to study its efficiency in vibration isolation under a magnetic field. Two tests were conducted on the drilling prototype setup used in this work; the first test was a hammer impact test. The torsional transfer function TTF analysis showed that the system’s natural frequency has shifted from 13.9 Hz to 17.5 Hz by the influence of increasing magnetic field around the MRE. The results showed that the continuous rotational vibration amplitude of the prototype is attenuated by more than 40%.