The problem of thermal instability, having bearing on the formation of astrophysical condensations, is investigated for a hydromagnetic fluid obeying generalized Ohm’s law, both for self‐gravitating and nongravitating configurations. Effects of finite Larmor frequency, resistivity, and finite plasma frequency on the stability of the system are studied and the condition of instabilities are derived for a temperature‐dependent and density‐dependent heat‐loss function. It is found that the condition of instability for propagation parallel to the ambient magnetic field is independent of finite resistivity, Hall current, and electron inertia effects and also of the magnetic field strength. For transverse propagation, however, the instability criterion involves the field strength, resistivity, and electron inertia terms. The Hall current is found to modify the growth rates for generally inclined propagation only. Both monotonically unstable and overstable modes of instability arise in the system depending on the dependence of the heat‐loss function on the local density and temperature.