A new model for substorm generation based on a stimulated ion diffusion across the magnetic field lines in the magnetotail plasma sheet is studied. The essence of the model is as follows: A partial ion demagnetization in the plasma sheet produces outward ion diffusion, which leads to charge separation and to the formation of field-aligned currents removing these charges. The magnitude of field-aligned currents is controlled by the ionospheric conductivity. The effect of field-aligned currents on the magnitude of the ionospheric conductivity can lead to the instability, consisting of an increase in these currents, a sharp increase in the ion diffusion, the dipolarization of the magnetotail magnetic field, and the substorm onset. The model includes the following issues: (1) Before the substorm onset the magnetotail plasma sheet approaches the Earth and magnetic field lines are stretched from the Earth. (2) Partially demagnetized (because of their large Larmor radius) ions in the magnetotail plasma sheet move from the Earth. This produces a radially directed electric field which restricts the ion escape and produces a system of field-aligned currents, with upward current at the boundary of ion demagnetization and downward current poleward of this boundary. (3) The magnitude of field-aligned currents is controlled by the ionospheric conductivity. For quiet conditions the ionospheric conductivity is small and field-aligned currents are weak. An increase in the ion diffusion leads to an increase of field-aligned currents. This stimulates the growth of the ionospheric conductivity, which leads to a new increase in the ion diffusion and to the substorm onset. ¿ 1999 American Geophysical Union