We prepared a new type of electrorheological particle composed of TiO 2 nanocrystallites-coated montmorillonite (MMT/TiO 2 ) nanocomposite by the sol–gel technique. The characterizations including TGA, XRD, TEM, SEM, EDS, and FTIR showed that TiO 2 was deposited on the surface of the MMT flakes with anatase nanocrystallite. An obviously enhanced ER effect was found in the MMT/TiO 2 nanocomposites based ER fluids compared with pure MMT and TiO 2 . Furthermore, the temperature and sedimentation stabilities of the MMT/TiO 2 ER fluids had also been improved greatly. Interestingly, the content of TiO 2 was demonstrated to have an important influence on the ER effect. When the content of TiO 2 was about 20 wt%, the ER effect of MMT/TiO 2 ER fluid reached its maximum, which was about 5 times that of pure MMT ER fluid and 27 times that of pure TiO 2 ER fluid. Based on dielectric analysis, the significant ER enhancement by formation nanocrystallites-coated montmorillonite was attributed to the enhanced interfacial polarization in this nanocomposite particle due to the effective limitation of the long-range drift of active ions in montmorillonite particles.