Ionization and edge‐density gradient effects on the long‐wavelength radiative condensation (MARFE) instability in tokamak edge plasmas are considered. A self‐consistent coupled equilibrium is derived from the continuity and temperature equations including the effects of radiation and ionization. In the limit relevant to edge plasmas, a modification of the temperature equilibrium derived earlier [Phys. Fluids30, 2429 (1987)] is obtained due to the rapid edge‐density variations. The critical radiation (density) limit is enhanced and results in significantly larger growth rates for the pure radiative mode than previously reported. Ionization processes affect the MARFE through a source term in the continuity equation, and produce an effect which qualitatively depends on the edge temperatureTL. ForTLless than a critical temperature, ionization phenomena weaken the MARFE instability. This behavior reverses at higher temperatures.