A rotary actuator and a method of providing kinesthesia using a magnetorheological fluid are provided. The method includes generating a solenoid which generates a magnetic field, thereby forming flux lines, in response to a current being applied thereto. A cylindrical rotor surrounds inner, outer and top surfaces of the solenoid, is freely rotatable about a rotary shaft disposed in an opened central portion thereof. A cylindrical housing surrounds inner, outer and bottom surfaces of the solenoid, and engages with the rotor. The magnetorheological fluid is disposed inside gaps among the solenoid, the rotor and the housing, and generates magnetic chains along the flux lines in response to the magnetic field. The thickness of walls of the rotor which surround the inner and outer surfaces of the solenoid decreases in the top-to-bottom direction. A space having a predetermined width is defined around the rotary shaft.