In the auroral zone, quasi-static parallel electric fields produce beams of ionospheric ions (e.g., H+, He+ and O+), which flow outward into the magnetosphere, providing a significant source of ions for the ring current and plasma sheet. Because the velocities to which these beams are accelerated is dependent on the mass of the ions, differential flows between the various ion species can develop which are unstable to an ion-ion streaming instability. Particle simulations and observations from DE 1 are used to investigate the heating of the ion beams produced by this instability. It is shown that there is net transfer of energy from the light ions to the heavy ions, with the heavy ions reaching maximum velocities near the beam velocity of the light ions. Bulk heating of the heavy ions occurs when their relative density is low while high-energy tails are produced when their relative density is high. The heating is primarily parallel to the magnetic field if the difference in the heavy and light ion beam velocities is subsonic while both perpendicular and parallel heating can occur if it is supersonic. In the latter case, very strong heating of an intermediate ions species such as He+ can also occur. Comparison with observations shows features consistent with heating via the ion-ion instability including perpendicular heating in the supersonic regime and parallel heating in the subsonic regime and a change in the heating between these regimes as the ratio of the H+ beam speed to the local sound speed is observed to decrease. This heating is, however, not always observed in association with enhanced wave emissions. This lack of waves is attributed to reabsorption of the waves as the ions become heated. ¿ American Geophysical Union 1989