The effect of carbon nanotube concentration and dispersion on the rheology of liquid crystalline solutions of hydroxypropylcellulose (HPC) has been experimentally studied. The rheology of nanocomposites of HPC and multiwalled carbon nanotubes (MWCNT) in m-cresol was characterized in steady-state and transient dynamic tests. The rheology as particle loading increases shows a very distinct response in the magnitude and scaling of the steady-state viscosity, and the storage and loss modulus. The liquid crystalline phase was characterized by direct observations by reflected polarized light microscopy. Additionally, an electric-field effect was observed on the rheology of the HPC/MWCNT in m-cresol soft composites. The HPC in m-cresol matrix is non-responsive, thus the electrorheological effect is due to the presence of the carbon nanotubes. The mechanism for this effect is still uncertain, since it does not follow the scaling predicted by simple models for heterogeneous or homogeneous ER fluids.