Polyethyene glycol (PEG)-coated Fe 3 O 4 ferrofluids were prepared by suspending the PEG-coated Fe 3 O 4 nanoparticles in an oligomeric PEG-400 carrier liquid, and their magnetorheological steady flow behavior was investigated. The PEG modification did not change the crystalline structure of Fe 3 O 4 , and the PEG-coated Fe 3 O 4 nanoparticles were of nearly spherical shape and had a narrow size distribution (4±1 nm in diameter). These nanoparticles exhibited no significant aggregation in the absence of the magnetic field. Under the magnetic field, the nanoparticles aggregated into string-like clusters oriented in the direction of the field. Correspondingly, the ferrofluids behaved essentially as the Newtonian fluids in the absence of the magnetic field but exhibited, under the magnetic field, a magnetorheological effect, i.e., the increase of the shear stress/viscosity associated with a pseudo-plastic and thinning character with no real yield stress. This lack of the real yield stress, possibly reflecting the absence of huge clusters connecting the measuring parts (plates) in the rheometer, suggested that the magnetorheological effect of the ferrofluids were related to deformation/disruption of the magnetically formed clusters of finite sizes under the shear. Interestingly, this effect was most significant for the Fe 3 O 4 nanoparticles having an intermediate amount of PEG coating. This result suggested a possibility that the relaxation of PEG chains in the coating layers of nanoparticles in the clusters contributed to the magnetorheological effect.