Abstract: In the paper, a $2 \frac{1}{2}$ dimensional, fully electromagnetic, relativistic CIC particle simulation code has been developed. The code is used to simulate the virtual cathode formation and the emission of high power microwave with a cold electron beam of cylindrical symmetry. A virtual cathode will be formed when the injected current exceeds the vaccum limited current of the beam. The current transmitted from the virtual cathode varies with time and its average is larger than the static vaccum limited current. A guide field is applied to confine efficiently the radial motion of the electrons. The virtual cathode oscillates well with a definite cycle. The oscillating axial current causes the microwave radiation and the power concentrates on TM modes. The guide field is in favour of microwave generation.