In the realm of “semi-active” suspension systems, this paper describes a truly “active damping” system. Thorough research and development of low voltage Electro-Rheological Magnetic (ERM) fluids, a revived rotary shock absorber suspension philosophy and a newly developed control algorithm have resulted in an active damping system that resolves the selection between ride comfort and handling performance.The ERM fluid technology, rotary shock absorber configuration and Digital Signal Processor (DSP) technology have advantages of transmitting high forces in a small compact package. The DSP controls the elements that digitize analog sensor signals and through software, result in active damping. We call the actuator the Rotary Active Control Damper (RACD, pronounced “rack-dee”). The variety of on-board sensors makes it possible to adjust vehicle performance through software.Mathematical analysis, computer simulations, and actual vehicle testing of the developed algorithm in which RACD is the damping actuator have shown the advantage of the developed technology. The system can be operational in either an open or closed-loop form for optimum continuous control of the active damper. Actual vehicle installation of RACD's with extensive testing have shown that this is a practical alternative to today's multi-damping shock absorbers.