Studies with a reduced-mode two-fluid model have revealed a promising candidate for the saturation mechanism of the Farley-Buneman instability in the daytime equatorial electrojet. The mechanism operates by redistributing the zero-order electron E¿B flow field. Secondary waves generated nonlinearly by the instability are responsible for the flow field modification. Saturation occurs because the modified flow reduces the principal charge transport responsible for the growth of the primary wave. Two-dimensional particle simulations of the instability exhibit saturation via the same mechanism. ¿ 1998 American Geophysical Union