A two-dimensional electromagnetic particle simulation model was used to study formation and stability of the magnetopause current layer near the subsolar point in the Sun-Earth Meridian plane. Interactions of the dipole magnetic field with the unmagnetized and magnetized solar wind for both the southward and northward pointing interplanetary magnetic fields (IMF) are considered in the simulations. For the case of zero IMF the simulation results show that the current layer remains stable and is essentially the same as in the one-dimensional simulation. The width of the current layer is given by the electron-ion hybrid gyroradius which is much smaller than the ion gyroradius. This is in sharp contrast to our earlier two-dimensional simulations in the equatorial plane where the current layer is strongly unstable against the high-frequency drift waves. The current layer is found to remain stable for the northward IMF as well. As in the one-dimensional simulation, the jump of the magnetic field at the current layer for the northward IMF remains small. For the southward IMF, collisionless magnetic reconnection is found to develop, leading to formation of magnetic islands and density peaking within the current layer. At later times the coalescence of magnetic island and the mixing of the plasma lead to a smooth density distribution in the magnetopause current layer, resulting in a current layer width of about 1 ion gyrodiameter. ¿ American Geophysical Union 1993