We study the properties of nonlinear Bloch waves in a diamond chain waveguide lattice in the presence of a synthetic magnetic flux. In the linear limit, the lattice exhibits a completely flat (wavevector k-independent) band structure, resulting in perfect wave localization, known as Aharonov–Bohm caging. We find that in the presence of nonlinearity, the Bloch waves become sensitive to k, exhibiting bifurcations and instabilities. Performing numerical beam propagation simulations using the tight-binding model, we show how the instabilities can result in either the spontaneous or controlled formation of localized modes, which are immobile and remain pinned in place due to the synthetic magnetic flux.