To enhance the stability of dispersed polyaniline (PANI) particles in a silicone oil system, a nonionic surfactant was adopted, and its effect on the electrorheological (ER) performance was investigated under an applied electric field. In the presence of a nonionic surfactant, the PANI based ER fluid exhibited not only an improved sedimentation stability based on the estimated sedimentation ratio but also an enhanced maximum yield stress behavior. Furthermore, the surfactant added ER suspension was applied to an ER damper system, and its damping performance was compared with the ER suspension without a surfactant.