  We analyze the process of string vacuum destabilization due to instanton
induced superpotential couplings which depend linearly on charged fields. These
non-perturbative instabilities result in potentials for the D-brane moduli and
lead to processes of D-brane recombination, motion and partial moduli
stabilization at the non-perturbative vacuum. By using techniques of D-brane
instanton calculus, we explicitly compute this scalar potential in toroidal
orbifold compactifications with magnetized D-branes by summing over the
possible discrete instanton configurations. We illustrate explicitly the
resulting dynamics in globally consistent models. These instabilities can have
phenomenological applications to breaking hidden sector gauge groups, open
string moduli stabilization and supersymmetry breaking. Our results suggest
that breaking supersymmetry by Polonyi-like models in string theory is more
difficult than expected.
