A collisional shear instability in a magnetized plasma is described and evaluated. The instability is related to electrostatic Kelvin Helmholtz but operates in inhomogeneous plasmas in the collisional regime. Boundary value analysis predicts that the linear growth rate for the instability could be comparable to that of the collisional interchange instability in the equatorial F region ionosphere under ideal conditions. An initial value simulation of a nonlinear model of the instability run under realistic conditions produces growing waves with a relatively long growth time (50 min) and with an initial wavelength of about 30 km. The simulation results are consistent with recent radar observations showing large-scale plasma waves in the bottomside equatorial ionosphere at sunset prior to the onset of spread F conditions. The role of shear instability in preconditioning the F region for interchange instabilities to occur after sunset is discussed.