A fully nonlinear development of the thermal self-focusing instability of high power radio waves in the ionosphere in the region near the critical surface is the subject of the present study. In the simulation model studied, a high-powered radio wave in the frequency range 5--10 MHz, with a 1% amplitude modulation, is launched vertically. In the high latitude geometry this represents a direction antiparallel to the magnetic field which is almost vertically downwards. The modulated wave undergoes strong self-focusing at the critical surface, where the group velocity of the wave goes to zero. The scale size of the structures transverse to the magnetic field is controlled by the wave intensity and the diffraction effects. The large parallel thermal conduction leads to the diffusion of these irregularities into the underdense and overdense plasma in narrow filaments. The depletion in the density in the overdense plasma allows propagation of the wave to higher altitude above the original critical surface and hence into the overdense plasma. ¿ 1998 American Geophysical Union