We investigate the dynamics of a space-charge limited, photoinjected, electron beam in a microscopic vacuum diode. Because of the small nature of the system it is possible to conduct high-resolution simulations where the number of simulated particles is equal to the number of electrons within the system. In a series of simulations of molecular dynamics type, where electrons are treated as point charges, we address and analyze space-charge effects in a micrometer-scale vacuum diode. We have been able to reproduce breakup of a single pulse injected with a current density beyond the Child-Langmuir limit, and we find that continuous injection of current into the diode gap results in a well-defined train of electron bunches corresponding to THz frequency. A simple analytical explanation of this behavior is given.