A general stability criterion for magnetospheric interchange instability, which includes an ionospheric destabilizing contribution, is derived for an arbitrary finite‐β magnetospheric model satisfying the magnetohydrostatic force balance. The derivation is based on the magnetospheric energy principle. Unperturbed field‐aligned currents in finite‐β nonaxisymmetric magnetospheric models are assumed to close via diamagnetic currents in the magnetosphere or in the ionosphere. By exploiting the limit of a very large perpendicular wave number and the eikonal representation for the perpendicular plasma displacement, the magnetospheric interchange mode is shown to be compressible. In this limit the kink mode makes no contribution to the change in the magnetospheric potential energy. By using magnetospheric flux coordinates, the explicit form of the magnetospheric potential energy change is calculated for interchange perturbations, which do not bend magnetospheric magnetic fields. For a nonaxisymmetric finite‐β magnetospheric model, a combined effect of the pressure gradient and field line curvature, not only in the meridional plane but also in the plane parallel to the longitudinal direction, is responsible for pressure‐driven interchange instability. For an axisymmetric, north‐south symmetric and low‐β magnetospheric model, in which the magnetic field is approximated by a dipole field, the m = 1 or m = 2 ionosphere‐driven mode, where m is the azimuthal mode number, has an upper critical equatorial β value for instability in the order of 1. Thus a substantial region of the inner magnetosphere or the near‐Earth magnetosphere may be unstable against ionosphere‐driven interchange instability caused by a horizontal plasma displacement on the spherical ionospheric surface.