Magnetorheological elastomers (MREs) were obtained by mixing soft polyurethane and carbonyl-iron particles. The effect of the volume fraction of the ferromagnetic particles on the MREs microstructure and properties, as well as their arrangement in relation to the external magnetic field were investigated. As a ferromagnetic component carbonyl–iron powder, with particle size from 6-9µm, was used. The amount of the carbonyl iron particles was varied from 1.5 to 33.0 %(v/v). The samples were produced with randomly dispersed and aligned carbonyl iron particles. Scanning electron and light microscopy techniques were used for the MRE microstructure observations. The rheological properties (G’, G’’ and tan δ) of the MRE were tested without and with the application of the magnetic field. It was found that the microstructure of MREs, particularly the amount and arrangement of the carbonyl-iron particles, has a significant influence on their rheological and damping properties.