Any automorphism of the Dynkin diagram of a symmetrizable Kac-Moody al
gebra g induces an automorphism of g and a mapping tau(omega) between
highest weight modules of g. For a large class of such Dynkin diagram
automorphisms, we can describe various aspects of these maps in terms
of another Kac-Moody algebra, the ''orbit Lie algebra'' g. In particul
ar, the generating function for the trace of tau(omega) over weight sp
aces, which we call the ''twining character'' of g (with respect to th
e automorphism), is equal to a character of g. The orbit Lie algebras
of untwisted affine Lie algebras turn out to be closely related to the
fixed point theories that have been introduced in conformal field the
ory. Orbit Lie algebras and twining characters constitute a crucial st
ep towards solving the fixed point resolution problem in conformal fie
ld theory.