The role of ion–ion acoustic instabilities in the formation and dissipation of collisionless electrostatic shock waves driven by counter-streaming supersonic plasma flows has been investigated via two-dimensional particle-in-cell simulations. The nonlinear evolution of unstable waves and ion velocity distributions has been analyzed in detail. It is found that for electrostatic shocks driven by moderate-velocity flows, longitudinal and oblique ion–ion acoustic instabilities can be excited in the downstream and upstream regions, which lead to thermalization of the transmitted and reflected ions, respectively. For high-velocity flows, oblique ion–ion acoustic instabilities can develop in the overlap layer during the shock formation process and impede the shock formation.