A suspension of micro- or nano-magnetic particles dispersed in a nonmagnetic carrier medium is called a magnetorheological (MR) fluid. MR fluids are smart materials that undergo rapid and reversible changes in rheological properties under an external magnetic field. The rheological properties of MR fluids can be easily controlled through manipulation of the magnetic field strength. Because of their unique and fast reversible changes in rheological properties, MR fluids are widely used in various devices and structures. However, they suffer long-term stability (particle sedimentation) problems because of the density mismatch between the suspended magnetic particle and the liquid medium. In previous studies, researchers have expended great efforts to simultaneously improve the stability and performance of MR fluids. Nevertheless, a trade-off relationship exists between the stability and the performance of MR fluids, that is, as MR performance increases, stability decreases, and vice versa. In this review, we recapitulate the findings of our group's recent achievements and address the conflicting issues. Reviewing the various routes will provide clues to solving the trade-off problem and suggest a guideline for developing high-performance and highly stable MR fluids.