A control algorithm for multi-stage dampers is developed based on the mode skyhook control concept, and implemented on the full vehicle system environment. The test vehicle system is equipped with the real time controller, four-stage variable dampers and sensors. The real time controller is developed using a digital signal processor(DSP), digital I/O, A/D and D/A converters. The dampers are driven by the electromagnetic actuators of less than 20 msec response time. The sensors include accelerometers, relative displacement transducers, and steering wheel rate sensors, etc. Through a series of tests in laboratory and proving ground, the performance of the semi-active suspension system is evaluated and it is shown that the vehicle dynamic characteristics is improved with the developed damping system. Futhermore, the parameter tuning methods to enhance vehicle dynamic performance are propsoed.