Magnetorheological (MR) fluid dampers (MRFDs) with variable damping and variable stiffness capability (VSVD-MRFDs) have demonstrated excellent vibration mitigation performance. However, there are limited studies on the development of bypass VSVD-MRFDs which offer both higher dynamic range and output force, apart from simple maintenance and straightforward assembly. In this study, a novel large-capacity VSVD-MRFD with an annular-radial bypass MR valve, as opposed to the typical practice of implementing the valve within the traveling piston in the hydraulic cylinder of the MRFD, is proposed. The main contribution of the present work includes: (i) providing the conceptional design and experimental dynamic characterization of the proposed VSVD-MRFD; (ii) investigating the feasibility of the proposed damper for realizing the VSVD characteristics under wide ranges of loading conditions. A test rig was, thus, designed to perform experimental characterization of the proposed VSVD-MRFD under wide ranges of mechanical loading and magnetic field conditions. A qualitative analysis including force-displacement, and force-velocity characteristics, together with a quantitative analysis including dynamic range, equivalent viscous and stiffness coefficients, were conducted as a function of loading frequency, displacement amplitude, and applied current. Results showed a maximum dynamic range and maximum output force of 4.5 and 7.8 kN, respectively. Also, the maximum relative increase in the equivalent viscous and stiffness coefficients were obtained, respectively, as 425% and 488%, when the applied current is increased from zero to 2 A. The results confirm the potential of the proposed VSVD-MRFD for applications in off-road suspension systems. The externally designed bypass MR valve permits a straightforward design modification for realizing wide scalability of damping force in different applications (e.g., off-road vehicle suspension systems).