Enhanced electromagnetic fluctuations near the electron plasma frequency &ohgr;e are observed in the auroral and polar regions of the terrestrial magnetosphere; until recently, their origin has not been understood. Linear Vlasov theory and a particle-in-cell simulation with a two-dimensional fully relativistic electromagnetic code have been carried out for an electron/electron instability in a homogeneous, collisionless, magnetized plasma model under the condition &ohgr;e/|&OHgr;e|<1 where &OHgr;e is the electron cyclotron frequency. At propagation parallel to the background magnetic field the instability is strictly electrostatic, but at oblique propagation significant electromagnetic fluctuations are also excited. The simulation reproduces the following essential features of the observed plasma frequency fluctuations: (1) narrowband frequencies near &ohgr;e, (2) relatively large electric fields (ΔE/ΔB≫1), and (3) episodes of both right-hand and left-hand polarization. This polarization result is new and has not been published before. Furthermore, the present theory and simulation show that the right-hand polarized fluctuations are on a short-wavelength beam mode and are excited by linear instability growth; the left-hand fluctuations are at relatively long wavelengths and are apparently driven by nonlinear processes. ¿ 2000 American Geophysical Union