Resolved computation of two dimensional insect hovering shows for the first time that a two dimensional hovering motion can generate enough lift to support a typical insect weight. The computation reveals a two dimensional mechanism of creating a downward dipole jet of counterrotating vortices, which are formed from leading and trailing edge vortices. The vortex dynamics further elucidates the role of the phase relation between the wing translation and rotation in lift generation and explains why the instantaneous forces can reach a periodic state after only a few strokes. The model predicts the lower limits in Reynolds number and amplitude above which the averaged forces are sufficient.