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The equilibrium structure and dynamics of magnetorheological (MR) fluids are studied in this work by simulations, where particles are modeled as dipoles with a quasihard spherical core. Upon increasing the interaction strength, controlled experimentally by the magnetic field, elongated clusters grow and, for intense fields, thick columns form, aligned with the field. The dynamics of the system is monitored by the mean-squared displacement and density correlation functions, which show an increasing slowing down with the attraction strength. The correlation function shows a two-step decay, with a separation between microscopic and long time dynamics, a typical hallmark of undercooled fluids. We have therefore analyzed the dynamics of this MR fluid using the typical concepts for undercooled fluids. Thus, the second decay of the density correlation function is fitted with a stretched exponential, and the wave-vector dependence of the fitting parameters studied. Both the amplitude and the time scale oscillate in phase with the structure factor. Our results support the idea that the magnetorheological effect is in fact the manifestation of a colloidal system approaching an attractive glass transition (or gel transition). [ABSTRACT FROM AUTHOR]