Above lunar crustal magnetic anomalies, large fractions of solar wind electrons and ions can be reflected and stream back towards the solar wind flow, leading to a number of interesting effects such as electrostatic instabilities and waves. These electrostatic structures can also interact with the background plasma, resulting in electron heating and scattering. We study the electrostatic waves and electron heating observed over the lunar magnetic anomalies by analyzing data from the Acceleration, Reconnection, Turbulence, and Electrodynamics of Moon’s Interaction with the Sun (ARTEMIS) spacecraft. Based on the analysis of two lunar flyby events in 2011 and 2013, we find that the electron two-stream instability (ETSI) and electron cyclotron drift instability (ECDI) may play an important role in driving the electrostatic waves. We also find that ECDI, along with the modified two-stream instability (MTSI), may provide the mechanisms responsible for substantial isotropic electron heating over the lunar magnetic anomalies.