A lower-hybrid instability with ion cyclotron harmonics is observed to be driven by an ion beam injected obliquely to the magnetic field confining the isothermal plasma of the Q-1 double plasma device. The instability occurs with the injection of a low-density, low-velocity beam and propagates normal to the field with phase velocity ω/k⊥ ≅ ub⊥, the perpendicular velocity component of the spiraling ions. The frequency spectrum, propagation, and growth rate are all in good agreement with a numerical calculation based on linear kinetic theory. Pulsed beams are used to follow the instability from the linearly growing stage to non-linear saturation. The anomalous perpendicular momentum loss of the beam is examined by both direct energy analysis and by measurements of the resultant beam orbit modifications. By varying the beam parameters, a transition of the non-linear saturation mechanism from the quasi-linear to the trapping regime is demonstrated.