The magnetometer onboard the Giotto spacecraft observed a diamagnetic cavity surrounding the nucleus of comet Halley. The location of the boundary of this diamagnetic cavity is determined by a balance between an inward magnetic pressure gradient force and an outward ion-neutral drag force, associated with collisions between the outwardly flowing neutrals and the stagnated ions. A one-dimensional, time-dependent, magnetohydrodynamical model has been developed for the inner coma of comet Halley, and includes ion-neutral collisions, photochemical production and loss of plasma, and finite conductivity. This model is used to investigate the plasma dynamics in the vicinity of the diamagnetic cavity boundary surface. A narrow transition layer with enhanced plasma density is shown to exist just inside the boundary, although a full understanding of this layer will require a two- or three-dimensional MHD model. The flux of cometary ions into this shocklike layer is removed by electron-ion recombination. The thickness of this layer is determined by the Mach number of the incident flow. ¿ American Geophysical Union 1989