An investigation of microinstabilities in a field reversal plasma is made by using a two-dimensional magnetostatic particle code for application to the magnetospheric tail. The reversed magnetic field is provided by the electron and ion diamagnetic currents, and the ion temperature is assumed to be higher than the electron temperature. It is observed that a flute instability is generated in a local region with a steep density gradient apart from the neutral sheet; the frequency is about the lower hybrid frequency, and the wavelength is roughly the electron Larmor radius. The observed dispersion relation suggests that the instability must be the lower hybrid drift (LHD) instability. The initial diamagnetic current rapidly decreases in association with formation of E¿B electron vortices, and simultaneously, particles are accelerated on the neutral line. In the magnetic null region, where the plasma beta is extremely large, an unstable electromagnetic mode is observed to develop in the nonlinear stage of the LHD instability, whereby the magnetic neutral line is deformed into a meandering structure. Anomalous resistivity and plasma transport are observed during the evolution of the LHD instability; it is to be noted that even on the neurtral line a small but finite resistivity is generated. It is found that the resistivity &eegr; increases as &eegr;∝ (Vdi/vthi)1.9, where Vdi is the drift speed of ions and vthi is the ion thermal speed. Also, significant electron heating is observed around the neutral line. This process may be relevant to electron heating in the neutral sheet of the magnetotail.