The effects of a poloidally asymmetric ionization source on both dissipative toroidal drift wave stability and the generation of mean sheared parallel flow are examined. The first part of this work extends the development of a local model of ionization-driven drift wave turbulence [Phys. Fluids B 4, 877 (1992)] to include the effects of magnetic shear and poloidal source asymmetry, as well as poloidal mode coupling due to both magnetic drifts and the source asymmetry. Numerical and analytic investigation confirm that ionization effects can destabilize collisional toroidal drift waves. However, the mode structure is determined primarily by the magnetic drifts, and is not overly effected by the poloidal source asymmetry. The ionization source drives a purely inward particle flux, which can explain the anomalously rapid uptake of particles which occurs in response to gas puffing. In the second part of this work, the role poloidal asymmetries in both the source and turbulent particle diffusion play in the generation of sheared mean parallel flow is examined. Analysis indicates that predictions of sonic parallel shear flow [v ∥ (r) ∼ cs] are an unphysical result of the assumption of purely parallel flow (i.e., V⊥ = 0) and the neglect of turbulent parallel momentum transport. Results indicate that the flow produced is subcritical to the parallel shear flow instability when diamagnetic effects are properly considered.