Effects of nonmagnetic interparticle forces on the on- and off-state behavior of MR fluids are investigated experimentally and with particle-level simulations. Suspensions of iron particles in an aliphatic oil are modified by surface-active species. The modifications significantly alter the off-state properties, but have little impact on the field-induced stresses. Simulations show similar behavior. Off-state rheological properties are strongly influenced by van der Waals forces and modifications of the short-range repulsive forces. Field-induced stresses are less sensitive to the nonmagnetic forces.