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The local dispersion relation for the lower-hybrid-drift isntability is derived in a fully self-consistent manner including the finite-beta effects associated with (a) transverse electromagnetic perturbations (δB≠0), and (b) resonant and nonresonant h/B0 electron orbit modifications. Moreover, the analysis is carried out for arbitrary values of local β=8πn (Te+Ti)/B02, Te/Ti, ω2pe/ω2ce, and VE/vi. (Here, VE is the cross-field E×B velocity, and vi is the ion thermal speed.) For all parameter regimes studied, the net effect of finite plasma beta is to reduce the maximum growth rate γm of the lower-hybrid-drift instability. The details, however, vary, depending on plasma parameters. For example, if Te≪Ti and VE<vi, then the maximum growth rate is reduced by a factor (1+βi/2)−1/2, relative to the value obtained when βi=8πnTi/B20→0. On the other hand, for Te≈Ti, there exists a critical value of plasma beta (βcr) such that the lower-hybrid-drift instability is completely stabilized (γ<0) for β≳βcr.