We study ion-induced instability of flute-like (k z º 0) diocotron modes in pure electron plasmas confined in a cylindrical Penning-Malmberg trap. In the absence of positive ion contamination, the low m θ diocotron modes are either neutrally stable (for m θ = 1) or weakly damped (for m θ = 2,3…) by Landau resonance on electrons corotating with the diocotron waves. By adding a small fraction (< 1%) of positive ions into a double-well confinement configuration, we observe exponential instability of low m θ diocotron modes. The growth rates g m are directly proportional to the overall ion fraction, N i /N e , and proportional to an effective charge separation of electrons and ions in the periodic wave perturbation.