This paper presents an optimal design of a large-capacity Magnetorheological (MR) damper suitable for off-road vehicle applications. The damper includes an MR fluid bypass valve with both annular and radial gaps to generate a large damping force and dynamic range. An analytical model of the proposed damper is formulated based on the Bingham plastic model of MR fluids. To establish a relationship between the applied current and magnetic flux density in the MR fluid active regions, an analytical magnetic circuit is formulated and further compared with a magnetic finite element model. The MR valve geometrical parameters are subsequently optimized to maximize the damper dynamic range under specific volume and magnetic field constraints. The optimized MR valve can theoretically generate off-state and on-state damping forces of 1.1 and 7.41 kN, respectively at 12.5 mm/s damper piston velocity. The proposed damper has been also designed to allow a large piston stroke of 180 mm. The proof-of-concept of the optimally designed MR damper was subsequently fabricated and experimentally characterized to investigate its performance and validate the models. The results show that the proposed MR damper is able to provide large damping forces with a high dynamic range under different excitation conditions.