Abstract The persistent radio counterpart of fast radio burst (FRB) 121102 is estimated to have particles, energy erg, and size cm. The source can be nebula inflated and heated by an intermittent outflow from a magnetar—a neutron star powered by its magnetic (rather than rotational) energy. The object is young and frequently liberating energy in magnetic flares driven by accelerated ambipolar diffusion in the neutron star core, feeding the nebula and producing bright millisecond bursts. The particle number in the nebula is consistent with ion ejecta from giant flares. The nebula may also contain the freeze-out of electron–positron pairs created months after the neutron star birth; the same mechanism offers an explanation for in the Crab Nebula. The persistent source around FRB 121102 is likely heated by magnetic dissipation and internal waves excited by the magnetar ejecta. The volumetric heating by waves explains the nebula’s enormous efficiency in producing radio emission. The repeating radio bursts are suggested to occur much closer to the magnetar, as a result of ultrarelativistic internal shocks in the magnetar wind, which are launched by the magnetospheric flares. The shocks are mediated by Larmor rotation, which forms a GHz maser with the observed ms duration. Furthermore, the flare ejecta can become charge-starved and then convert to electromagnetic waves.