The present work covers various advancements made in synthesis, characterization and ap-plications of magneto rheological (MR) fluids. It also focuses upon the challenges associated with synthesis of MR fluids, appropriate measures to address the challenges associated with synthesis of MR fluids. Research gaps in the area of MR fluids preparation, characterization are identified and suitable conclusions are drawn based on the body of literature reviewed. From the review of vast literature on MR fluids, the following observations were made. High magnetic saturation, low sedimentation, high shear yield strength, high permeability are some of the desirable characteristics for selection of MR fluids for vast majority of applications. From the literature, carbonyl iron particles are found to be one of the efficient and cost effec-tive MR fluid particles with high magnetic saturation. From recent studies, multi walled Nano tube based anti-sedimentation agents have resulted in high suspension and low sedimentation of MR particles. From some of the latest scientific studies, MR fluids made out of ionic liq-uids and silicon oils [17] have found to show superior shear yield strength compared to other carrier fluids like mineral oil, synthetic oils. MR fluid with carbonyl iron particle of size 4 µm, suspended in carrier fluid made out of synthetic or mineral oils is found to cater the needs of many applications.