The effect of mobile ion background on the dynamics of a planar virtual cathode with retarding field is investigated. The ions appear in the diode gap due to ionization of a neutral gas by the electron beam. Detailed examination of the self-consistent processes of the virtual cathode dynamics, gas ionization, and ions motion is performed using the particle-in-cell simulation. It is shown that the presence of ions leads to the virtual cathode neutralization, its displacement, and subsequent anew formation. The microwave generation has the form of a sequence of pulse packets, whose duration depends on the value of the retarding potential and the kind of gas.