This Phase I Small Business Innovation Research project aims to produce a family of novel liquid crystal modified electrorheological (ER) fluids. This proposed work builds upon promising earlier research on single component liquid crystalline ER fluids and combines it with the traditional two component fluid to prepare ER fluids with much improved properties. The proposed novel ER fluid would have shorter response times and higher magnitude of ER effect. The results of the proposed research will lead to an understanding of the factors which control the ER effect on a molecular scale and lead to better understanding of the ER phenomenon. The fluids described are inherently superior to traditional two phase electrorheological fluids. Applications in shock dampening, robotic actuators, temperature resistant lubricants and fluid damping are examples of some of the commercial sectors where electrorheological fluids will be applied. These fluids can be incorporated into a myriad of products ranging from the emerging robotics market to heavy machinery.