M(ATRIX) STRING THEORY ON K3

We conjecture that M-theory compactified on an ALE space (or K3) is de scribed by O-branes moving on the ALE space. We give evidence for this by showing that if we compactify another circle, we recover string th eory on the ALE space. This guarantees that in the large N limit, the matrix model correctly describes the force law between gravitons movin g in an ALE background, We also show the appearance in M(atrix) theory of the duality of M-theory on K3 with the heterotic string on a three -torus. (C) 1997 Elsevier Science B.V.