A low-energy multipole line cusp ion source with two-grid extraction system has been developed and characterized for studying the role of the charge exchange processes on ion beam extraction, transport, and neutralization. The ion source is operated for extraction of Ar <sup xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">+</sup> ion beam of current 50–240 mA at energies 850–1650 eV. The characterization of the ion beam is carried out at various axial positions along a 200–815-mm beam path with a background pressure of 4– <inline-formula xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink"> <tex-math notation="LaTeX">$20\times10$ </tex-math></inline-formula> <sup xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">−5</sup> Torr. An 11-channel Faraday cup array is used to measure the radial profiles of ion current density and angular beam divergence at these positions. The beam divergences are found to be in the range of 6°–15° for beam perveance of 0.50– <inline-formula xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink"> <tex-math notation="LaTeX">$3.75\times10$ </tex-math></inline-formula> <sup xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">−9</sup> AV <sup xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">−3/2</sup> . The attenuation of ion beam current along the beam path is observed due to the charge exchange neutralization of the energetic ions in the presence of high background pressure. Since ion current density along the beam path can be reduced by both the charge exchange processes and beam divergence, the accounting of beam particles, i.e., energetic ions and neutrals, at larger distances is difficult by the measurements of ion current density using the Faraday cup alone. The flux of energetic particles (energetic ions and fast neutrals) is therefore obtained by a thrust measurements on a beam target fixed at a distance of 800 mm from the ion source. The neutralization of the ion beam obtained by the emission of electrons from a hot filament neutralizer is also investigated in the presence of the charge exchange processes. Space-charge neutralization is provided initially by the secondary electrons emitted from the vessel walls or by the charge exchange processes even without the neutralizer operating at the desired temperature. However, the current neutralization is achieved only by the electrons emitted from the hot filament neutralizer operating in a space-charge-limited mode.