A 2 1/2-D nonradiative, electromagnetic particle code is used to investigate processes in the plasma sheet in the Earth's magnetotail that can generate the field-aligned currents associated with auroral arcs. The setting of the simulation is the midnight meridian plane on closed magnetic field lines. The magnetic field is supported self-consistently by a plasma sheet population. The system is driven by an external convection electric field that causes particles from the lobe region to drift onto the plasma sheet. Momentum exchange between the field and the lobe particles accelerated through the plasma sheet balances the sunward Maxwell stresses. The particle and field boundaries are spatially separated by a collisional layer representing the effect of the neutral atmosphere. During the simulation new particles are continually injected into the system from the ''ionospheric'' regions. The simulations show the generation of currents circulating in the noon-midnight plane due to the differing degrees of magnetization between ions and electrons. These currents give rise to magnetic fields perpendicular to the noon-midnight meridian plane. North-south asymmetries in the lobe plasma density enhance current circulation between the plasma sheet and the ionospheric boundaries. Necessary conditions for generation of auroral currents suggest a new interpretation of the growth and expansive phases of the auroral substorm. ¿ American Geophysical Union 1992