The coprecipitated magnetite particles were coated by polyoxyethylene alkyl ether acetates. After the surfactant coated magnetite was washed by ethanol, they were well dispersed in nematic liquid crystal, that is, cyanobiphenyl type and phenylcyclohexane type liquid crystals. The saturation magnetization of prepared liquid crystal based magnetic fluid was 0.1 to 0.2 T. However, as decreasing the temperature of magnetic fluid, the phase separation appeared. Also this magnetic fluid showed the electrorheological effect, therefore, this fluid was considered as ER magnetic fluid. When the magnetic fluid was used in a cylindrical damper, the magnification factor at resonance point slightly decreased.