A detailed study of the effects of auroral current systems on thermal ionospheric plasma transport and loss is conducted using a new ionospheric model. The mathematical formulation of the model is a variation on the 5‐moment approximation which describes the temporal evolution of density, drift, and temperature for five different ion species in two spatial dimensions. The fluid system is closed through a 2‐D electrostatic treatment of the auroral currents. This model is used to examine the interplay between ion heating, perpendicular transport, molecular ion generation, and type‐1 ion upflows in a self‐consistent way for the first time. Simulations confirm that the depletion of E‐region plasma due to current closure occurs on extremely fast time scales (5–30 s), and that it is dependent on current system scale size. Near the F‐region peak, the loss is mostly due to enhanced recombination from the conversion of the plasma to molecular ions. The F‐region loss process is fairly slow (120–300 s) by comparison to lower altitude processes and is highly electric field dependent. On similar time scales, transient ion upflows from frictional heating move plasma from the near topside ionosphere (∼500 km) to higher regions, leaving depletions and enhancing plasma densities at very high altitudes. Results indicate the existence of large molecular ion upflows near the F‐region peak and may shed some light on ionospheric source regions for outflowing molecular ions. Neutral atmospheric winds and densities are also shown to play an important role in modulating molecular ion densities, frictional heating, and currents
