A theory of higher-derivative 2D dilaton gravity which has its roots i
n the massive higher-spin mode dynamics of string theory is suggested.
The divergences of the effective action to one-loop are calculated, b
oth in the covariant and in the conformal gauge. Some technical proble
ms which appear in the calculations are discussed. An interpretation o
f the theory as a particular D = 2 higher-derivative sigma-model is gi
ven. For a specific case of higher-derivative 2D dilaton gravity, whic
h is one loop multiplicatively renormalizable, static configurations c
orresponding to black holes are shown to exist.