Conventionally, two different liquids are used in automobile industries for lubrication and cooling purpose, and its property variations demand different handling systems (pump, storage tank, etc.). In this project, we propose to use single fluid for both lubrication and cooling purpose, which reduces the number of accessories and also promotes interchangeability. Magnetorheological fluid (MRF) is highly viscous in nature; generally viscous fluids are good in lubrication, but fail to provide required cooling effect because of its high kinematic viscosity, whereas, with the small influence of magnetic field intensity, magnetorheological fluid could act as a heat transfer fluid.