Collective motion is found at all scales in biological and artificial systems, and extensive research is devoted to describing the interplay between interactions and external cues in collective dynamics. Magnetotactic bacteria constitute a remarkable example of living organisms for which motion can be easily controlled remotely. Here, we report a new type of collective motion where a uniform distribution of magnetotactic bacteria is rendered unstable by a magnetic field. A new state of “bacterial magneto-convection” results, wherein bacterial plumes emerge spontaneously perpendicular to an interface and develop into self-sustained flow convection cells. While there are similarities to gravity driven bioconvection and the Rayleigh–Bénard instability, these rely on a density mismatch between layers of the fluids. Remarkably, here no external forces are applied on the fluid and the magnetic field only exerts an external torque aligning magnetotactic bacteria with the field. Using a theoretical model based on hydrodynamic singularities, we capture quantitatively the instability and the observed long-time growth. Bacterial magneto-convection represents a new class of collective behaviour resulting only from the balance between hydrodynamic interactions and external alignment.