Electrorheological (ER) fluids are colloidal suspensions of highly polarizable particles in a nonpolarizable solvent. In a strong electric field, the behavior of the fluid is dominated by the dipolar interactions between the colloidal particles. We address problems of structure formation and long-time relaxation in an ER fluid. When a high electric field is applied to a fluid, dielectric columns oriented parallel to the field rapidly form. The relaxation of these columns is a much slower process. We calculate the shape of the columns formed and the time scale for the relaxation of the columnar structure.