In order to improve the stability of magnetorheological (MR) fluids, viscoelastic medium having 2.2 Pa yield stress has been used as a continuous phase and nanosized CrO2 particles are added too. The rheological properties as well as the dispersion stability of MR fluids have been studied by using a stress-controlled rheometer and sedimentation test. The steady-shear MR response was independent of the continuous and nano additives and the fieldinduced yield stress increased subquadratically with the flux density. Since the constant stress is generated within the limit of zero shear rate, the plateau in the flow curve corresponds to the Bingham yield stress. Under an external field, the yield stress varied as B(3/2). The yield stress has an approximately linear relation with the particle volume fraction.