Magnetorheological fluids (MRFs) are functional materials, prepared by dispersing magnetic particles in a nonmagnetic carrier fluid, that exhibit a change in mechanical properties (e.g., increase in viscosity and yield stress) when subjected to a magnetic field. Change in mechanical properties is demonstrated by a fast (i.e., fraction of milliseconds) and reversible transition from a liquid‐ to a solid‐like state. This transition, due to a structural reorganization of magnetic particles in the carrier fluid, makes MRFs a valuable material for damping, breaking systems, medical and prosthetics, and robotics. Since the discovery of MRFs in 1948, developing MRF preparation methods that result in improved performance and the storage without oxidation and settling is paramount. This article presents a review on recent developments in the preparation process of MRFs with a special emphasis on the state of the art in additives and coatings used in enhancing MRF chemical, colloidal, and thermal stability. Recent advances in MRF materials and formulations that have increased yield stress and magnetic properties are discussed. Finally, this review analyses the present‐day challenges in MRF research and makes suggestions for the field to improve MRF stability and performance drawing on previous MRF work and work outside of the fields.