Observations show that dispersive Alfvén waves (DAWs) play a significant role in the heating and generation of turbulence at reconnection sites. The present work investigates the nonlinear evolution of DAWs and the related turbulence with pre-existing magnetic islands in solar wind. The turbulence is driven by nonlinear interactions, including wave–wave coupling and ponderomotive force, in the presence of pre-existing magnetic islands. Using computer modeling and numerical techniques, the resulting dynamical equation is solved. Space integration is performed using a pseudo-spectral method, while time integration is carried out using a finite difference scheme. The simulation findings validate the presence of turbulence and demonstrate the spatiotemporal evolution of the DAW localized structures and current sheets. The scale sizes of the localized structures have been calculated using a semi-analytic model and it has been demonstrated that these scale sizes are dependent on the characteristics of magnetic islands and ponderomotive nonlinearity. Thermal tail formation in energetic ions has been investigated based on the power-law scaling of turbulence generation.