We have used a 2D resistive and compressible MHD code to study the formation and subsequent development of a plasmoid by near-earth reconnection. The initial equilibrium configuration is characterized by a distant neutral line at a position, where the pressure in the plasma sheet has a minimum. The resistivity is allowed to grow with the current density. Reconnection at a near-earth position is initiated by a small localized resistivity which is subsequently switched off. Fast reconnection develops self-consistently and leads to closed field lines in the plasma sheet. Eventually the field lines to the distant neutral line are reconnected and the pinched-off plasma sheet moves downtail. Continuous reconnection leads to a layer of reconnected field lines around the plasmoid which are connected to interplanetary field lines. In the case of open top and bottom boundaries secondary tearing leads to two near-earth neutral lines and the subsequent evolution of a second plasmoid. This can result in the figure-8 structure inferred from magnetic field data in the deep tail. A closed high latitude boundary inhibits the secondary tearing and the original plasmoid is more elongated as it is ejected down the tail. ¿ American Geophysical Union 1987