This study presents an electromagnetic design methodology for a rotary magnetorheological (MR) fluid actuator. In order to improve the performance of the MR fluid actuator, the magnetic field should be effectively applied to the MR fluid. Therefore, it is important that the magnetic circuit composed of the MR fluid, the ferromagnetic material for magnetic flux path, and the electromagnetic coil is well designed. For this purpose, two effective approaches are proposed: one is to shorten the magnetic flux path by removing the unnecessary bulk of the yoke in order to improve the static characteristic of the MR fluid actuator, and the other is to increase the magnetic reluctance of the magnetic circuit by minimizing the cross-sectional area of the yoke through which the magnetic flux passes in order to improve the dynamic and hysteretic characteristics. The effectiveness of the proposed design methodology is verified through magnetic analysis and a series of basic experiments.