A new model of the cold Io torus is described. Ions and energy are injected into the system by independent processes so that the mass balance is isolated from the energy balance. The primary source of energy is local ionization and acceleration of hot pickup ions resulting from charge exchange between thermal ions and an extended cloud of Iogenic sulfur and oxygen atoms. The primary energy loss mechanism of the plasma is collisionally excited line emission at optical wavelengths. The primary ion source is radial diffusion inward from the hot torus on a time scale of 140-710 days. The primary ion loss mechanism is a novel two-step enhanced recombination mechanism involving charge exchange between thermal ions and an extended cloud of neutral SO2 molecules, followed by rapid dissociative recombination of the resultant molecular ion. The model provides a self-consistent solution which reconciles a number of diverse observations with known physical processes.