The high-frequency vibration and resonance of armature assembly in the hydraulic servo valve are the main reasons for instability and failure. Magnetic fluid (MF) operating in the squeeze mode can be taken as an effective damper for resonance suppression in the servo valve. Due to excitation difficulty and the low signal-to-noise ratio of high-frequency vibration signals, the capability of MF to modify multiple-order modal damping ratios in a multi-degree-of-freedom system is still unclear. To reveal the mechanism of magnetic fluid for improving modal damping ratios, an algorithm for modal damping ratio identification is proposed. The modal damping ratios of the armature assembly with and without magnetic fluid are identified based on the tested resonance free decay responses. Four resonance frequencies of armature assembly are observed, and the corresponding damping ratios are identified. The equivalent modal damping ratios due to squeeze flow of MF are obtained. The results show that the proposed algorithm can identify damping ratios with an accuracy of up to 98.79%. The damping ratios are improved by double or more due to the magnetic fluid, and the maximum resonance amplitudes are significantly reduced by 65.2% (from 916.5 μm to 318.6 μm).