Spatially localized unstable waves are observed around a dipole magnet in a low‐density plasma. The observed wave frequency (&bartil;150–200 kHz) with a high fluctuation level (&bartil;20%) is much higher than an ion‐cyclotron frequency. Correlation measurements confirm azimuthal propagation of the unstable wave on the axis of the dipole magnet. The calculation using a fluid model is found to account qualitatively for the results, and predicts that the waves are excited by two stream instabilities ascribed to an electron drift caused by the density and the potential gradients perpendicular to the magnetic field.