The linear and nonlinear properties of the electromagnetic ion/ion cyclotron (EMIIC) instability are investigated using linear theory and hybrid simulations. The instability is driven by the relative streaming of two field-aligned ion beams. In the electrostatic limit it reduces to the well-known ion beam driven electrostatic ion cyclotron instability, but for finite beta the instability is enhanced and propagates over a broader range of angles with respect to the magnetic field. Linear theory and one-dimensional hybrid simulations are used to study the characteristics of the instability as a function of beam density, angle of propagation (&thgr;), ion beta, ratio of the streaming velocity to the Alfven speed, electron to ion temperature ratio, and other parameters. Generally, the one-dimensional calculations show that the instability behaves like its electrostatic counterpart when &thgr; is near 90¿, saturating at low levels by heating the ions in the perpendicular direction. At smaller angles the instability is dominated by electromagnetic effects, large-amplitude waves, and stronger beam coupling. Two-dimensional hybrid simulations show some evidence for coherent effects due to a narrowing of the wave spectrum during the linear growth stage and a more quasi-linearlike heating process in the nonlinear phase, eventually yielding similar asymptotic values for plasma parameters. Applications of the EMIIC instability to upstream and downstream waves and ion dissipation at slow shocks in the magnetotail and to ion heating in the plasma sheet boundary layer are briefly discussed. ¿ American Geophysical Union 1992