We propose a new explanation for medium- to small-scale irregularities in the mid-latitude E region. We show that the very wind field that forms thin layers of ionization can also create plasma instabilities. To date, the application of gradient drift instability theory has been restricted to free energy sources involving the ambient electric field. We show that a vertical shear in the zonal wind not only leads to layer formation, but also to unstable regions on both sides of the layer. The mechanism thus does not suffer from the problem inherent in electric field-driven processes, namely, that the mapping of electric fields along magnetic field lines leads to stabilizing conditions on one side of the layer, even if the other side is unstable. Evidence is given that anomalous diffusion due to such waves affects the evolution of the layers. ¿ 1998 American Geophysical Union