Current knee designs for prosthetic legs rely on electric motors for both moving and stationary states. The electric motors draw an especially high level of current to sustain a fixed position. The advantage of using magnetorheological (MR) fluid is that it requires less current and can have a variable braking torque. Besides, the proposed prosthetic leg is actuated by NiTinol wire, a popular shape memory alloy (SMA). The incorporation of NiTinol gives the leg more realistic weight distribution with appropriate arrangement of the batteries and wires. The prosthesis in this research was designed with MR brake as stopping component and SMA wire network as actuating component at the knee. The MR brake was designed with novel non-circular shape for the rotor that improved the braking torque while minimizing the power consumption. The design also helped simplify the control of braking process. The SMA wire network was design so that the knee motion was actively rotated in both directions. The SMA wires were arranged and played very similar role as the leg’s muscles. The study started with the overall solid design of the knee including both MR and SMA parts. Theoretical models were derived and programmed in Simulink for both components. The simulation was capable of predicting the power required for moving the leg or hold it in a fixed position for a certain amount of time. Subsequently, the design was prototyped and tested to validate the theoretical prediction. The theoretical models were updated accordingly to correlate with the experimental data.