A two-dimensional (in configuration space), three-dimensional (in velocity space) electrostatic explicit particle code is used to investigate the interaction between an ion beam flowing along the magnetic field and a highly magnetized plasma (&ohgr;ce/&ohgr;pe=2, 4, 8). The beam drift velocity Vdi is larger than Vte, the electron thermal velocity (Vdi/Vte=1.2, 2.5), and much larger than the thermal velocities of the core and beam ions (Vdi/Vti core=12, 25). Two instabilities are found to develop. First, the interaction between the ion beam and electrons leads to the rapid growth of parallel modes and to the fast diffusion of electrons along the magnetic field, predominantly in the ion beam direction. This ion-electron instability is rapidly quenched by electron heating. Second, an ion-ion instability develops, which involves oblique modes leading to a selective heating of ions in a direction oblique to B. It is shown that the heating via the electron-ion instability is a necessary step for the development of the ion-ion instability. Finally, it is shown that the nonlinear development of the ion-ion instability gives rise to purely perpendicular modes that are not linearly unstable. ¿ American Geophysical Union 1991