This paper proposes a visual haptic display with an encountered-type haptic interface using MR (Magneto-Rheological) fluid. The proposed system can display arbitrary force by controlling the magnitude of yield stress of MR fluid and provide realistic visualization by displaying computer graphics images on the container of MR fluid directly. An operator can feel resistance force by putting instruments in the MR fluid container and can sense reality by virtue of the visual display on the MR fluid container. This type of system would be useful for surgical simulator since an operator can freely move and easily change the instruments as in real operation. In the demonstration, one of fundamental brain surgery operations, cutting arachnoid trabecular, is considered as an application.