Particle simulation is used to demonstrate the formation of ion holes and parallel potential structures in a background plasma driven by an ion beam. Recent satellite observations suggest that such potential structures which are observed along auroral field lines may form in a cool background ion population. We show that if such a background is present ion holes form in the background ion distribution and travel at the acoustic speed in the direction of the ion beam velocity. Linear stability analysis shows this system to be unstable to a beam-acoustic mode involving the beam ions and the background electrons. These beam unstable modes nonlinearly pump the linearly stable ion acoustic modes in the background plasma seeding the formation of ion holes. The dynamics of these structures are essentially indistinguishable from the evolution of weak double layers seen in previous simulations. ¿ American Geophysical Union 1991