Conducting polyaniline (PANI) and inorganic Na+-Montmorillonite (Na+-MMT) nanocomposite material was prepared via a microemulsion polymerization method. To observe the morphology of the as-synthesized PANI/Na+-MMT nanocomposite, SEM images were employed. D-spacing of the PANI/Na+-MMT nanocomposite obtained from the XRD was found to become wider than that of pure Na+-MMT particles due to the successful intercalation of PANI into Na+-MMT layers. The fabricated PANI/Na+-MMT nanocomposite based electrorheological (ER) fluid was prepared by dispersing the particles in insulating silicone oil. Dynamic mechanical properties of the ER fluid were investigated via an oscillatory testing method using a vertical oscillation rheometer under an applied electric field, showing typical ER behavior.