This article presents the state-of-the-art sensors design based on magneto-rheological (MR) fluid. In smart materials, the magneto-rheological fluid is one of the prominent material, which changes rheological properties on application of magnetic field. The MR fluid is mainly used for designing the dampers, clutches and mounts for heavy vehicle systems. However, the MR fluid can also be used for sensor design applications, which has not been much reported in the literature. This review paper summarizes the design of following novel sensors such as resonant, current, magnetic flux and tactile sensors designed using MR fluid. First, this article introduces the design and development of resonant based measurement system used for studying the properties of magneto rheological fluid. Secondly, this paper discusses about the novel electrical current measurement technique using MR fluid in shear mode of operation. This paper discuss on the design of novel variable resistor using the behavioural change of MR fluid in third. Finally, the design of tactile display utilizing magneto rheological fluid is introduced and discussed. Tactile display is used in robotic system in minimally invasive surgery (MIS) to provide a surgeon tactile information of touching remote biological tissues or organs. This review article will motivate the readers to design the novel sensors using magneto-rheological fluid with advanced technology.