The braking performance of magnetorheological (MR) brake can be improved by utilizing hybrid mode of operation of MR fluid in brake and by enhancing the rheological properties of MR fluid. This work presents an MR drum brake, which can operate in shear mode as well as in shear plus compression mode, i.e., hybrid mode. The use of compression mode increases the interactions of iron particles with the contacting surface of the rotor and stator, which affects the gap of the MR zone, which is one of the performance parameters for MR brakes. Hence, the presented work attempted to prepare an MR fluid that offers not only good tribological properties as well as best braking performance with MR drum brake. So, MR fluids have been prepared using the same percentages of different additives such as graphite flakes, MWCNTs, and zinc oxide. The rheological, tribological, and braking performance of these prepared MR fluids have been studied using a rheometer, tribometer, and brake inertia dynamometer, respectively. The study found that zinc oxide-based MR fluid is the most suitable MR fluid for the presented MR drum brake in terms of braking performance and tribological aspects.