Linear and nonlinear rheological behavior of a suspension of polymer-coated colloidal spheres was experimentally investigated for systems with a polymer layer thickness comparable to the core size of the particles. The low shear plateau of the flow curves increases 5 orders of magnitude with increasing concentration in a very narrow range around a critical concentration. Below this critical concentration, the dependence of the low shear viscosity on concentration differs significantly from hard sphere behavior. Above the critical concentration, low shear viscosity plateaus were observed, too, followed by an extreme shear thinning in which the shear stress was virtually constant. In this concentration range, hysteresis was observed. The behavior at high shear rates was captured with lubrication-based modeling. Viscoelastic behavior could only be measured at concentrations above the transition. The observed storage moduli were virtually frequency independent. Their concentration dependence was satisfactorily described with a model based on the work of Elliott and Russel [see: J. Rheol. 1998, 42, 361.]. An essential ingredient of this model is the radial pair distribution function, g(r12). Using Monte Carlo simulations to calculate g(r12), both ordered and disordered structures were found above a concentration close to the critical concentration found from the flow curves. These structure differences caused only a marginal difference in calculated values for the storage modulus.