This work is concerned with the experimental investigation of tribological and rheological properties ofcore–shell (carbonyl iron is the core and graphene oxide is the shell) particle-based MR fluid. Carbonyliron (CI) particles were encapsulated with graphene oxide (GO) by a simple wet stirring process. The surfacemorphology, structural properties, and magnetic properties of graphene oxide encapsulated CI particleswere analyzed by Field Emission Spectroscopy (FE-SEM), Raman Spectroscopy, and VibrationalSample Magnetometer (VSM). The rheological properties of prepared samples were examined on a modularcompact rheometer. The CI@GO particle-based MR fluid exhibited lower yield stress compared tobare CI particle-based MR fluid. Tribological tests of developed MR fluid were conducted on a universaltribometer with and without the presence of a magnetic field to ascertain the friction and wear behaviour. Experimental results revealed that the tribological properties are significantly improved by usingCI@GO-based MR fluid in comparison to bare CI-based MR fluid and dry sliding conditions. Further, thewear analysis of worn surfaces was observed on FE-SEM, Energy-Dispersive X-ray Spectroscopy (EDS),and 3D-profilometer before and after each test. Three body abrasion wear mechanism was observed withsome ploughing and groove formation.