A linear and nonlinear kinetic theory of resistive ballooning modes that includes diamagnetic drifts and finite Larmor radius effects is presented. The linear stability of resistive ballooning modes is examined analytically and numerically. A renormalized resistive ballooning equation is derived, and the saturation level of the instabilities is analytically calculated. Finally, a calculation of the electron thermal conductivity for the large &ohgr;@B|regime is presented.