To enhance dispersion stability of magnetorheological (MR) fluids, hybrid magnetic particles of carbonyl iron (CI)/ poly(vinyl butyral) (PVB) with core/shell microstrcutre (CI-PVB) were prepared, since pure magnetic CI based MR fluid systems show severe sedimentation of the CI particles due to the large density mismatch with the carrier liquid and difficulties in redispersion after caking. The composite particles of CI-PVB have a lower density than that of the pure CI particles, while exhibiting almost original magnetic property of the CI. Both CI and CI-PVB particles were dispersed in mineral oil (20 vol%) and their MR characteristics were examined via a rotational rheometer with a magnetic field supplier. Various characterizations of the CI-PVB particles were performed via SEM, TEM and FT-IR. Both yield stress and flow curve of shear stress as a function of shear rate of the MR fluids were investigated under applied magnetic field strengths.