A new interpretation of AMPTE/CCE observation of substorm onset and current disruption and the corresponding physical processes are presented. Toward the end of late growth phase the plasma &bgr; increases to ≥50 and a low frequency instability with a wave period of 50--75 sec is excited and grows to a large amplitude at the current disruption onset. At the onset, higher frequency instabilities are excited so that the plasma and electromagnetic field form a turbulent state. Plasma transport takes place to modify the ambient pressure profile so that the ambient magnetic field recovers from a tail-like geometry to a more dipole-like geometry. A new theory of kinetic ballooning instability (KBI) is proposed to explain the low frequency instability and the high &bgr; threshold (&bgr;c≥50) observed by AMPTE/CCE. The stabilizing effect is mainly due to kinetic effects of trapped electrons and finite ion Larmor radii which give rise to a large parallel electric field and hence a parallel current that greatly enhances the stabilizing effect of field line tension. As a result &bgr;c is greatly increased over the ideal MHD ballooning instability threshold by ≥O(102-103). The wave-ion magnetic drift resonance effect produces a perturbed resonant ion velocity distribution centered at a duskward velocity roughly equal to the average ion magnetic drift velocity. This perturbed ion distribution explains the enhanced duskward ion flux during the explosive growth phase and can excite higher frequency instabilities (such as the cross-field current instability). ¿ 1998 American Geophysical Union