We study the M(atrix) theory description of M-theory compactified on a
T-5/Z(2) orbifold. In the large volume limit we show that M-theory dy
namics is described by N = 8 supersymmetric USp (2N) M(atrix) quantum
mechanics. Via zero-brane parton scattering, we show that each orbifol
d fixed point carries an anomalous G-flux closed integral[G/2 pi] = -1
/2. To cancel the anomalous G-flux, we introduce a twisted sector cons
isting of sixteen five-branes represented by fundamental representatio
n hypermultiplets. In the small volume limit we show that M-theory dyn
amics is effectively described by (5+1)-dimensional (8, 0) supersymmet
ric USp (2N) chiral gauge theory. We point out that both perturbative
and global gauge anomalies are cancelled by the sixteen fundamental re
presentation hypermultiplets in the twisted sector. We show that M(atr
ix) theory is capable of turning on a space-time background with the r
equired sixteen five-branes out of zero-brane partons as bound states.
We determine the six-dimensional space-time spectrum from the M(atrix
) theory for both untwisted and twisted sectors and find a complete ag
reement with the spectrum of (2, 0) supergravity. We discuss the M(atr
ix) theory description of compactification moduli space, symmetry enha
ncement thereof as well as further toroidal compactifications. (C) 199
8 Elsevier Science B.V.