Non-Perturbative Effects on a Fractional D3-Brane

In this note we study the N=1 abelian gauge theory on the world volume of a single fractional D3-brane. In the limit where gravitational interactions are not completely decoupled we find that a superpotential and a fermionic bilinear condensate are generated by a D-brane instanton effect. A related situation arises for an isolated cycle invariant under an orientifold projection, even in the absence of any gauge theory brane. Moreover, in presence of supersymmetry breaking background fluxes, such instanton configurations induce new couplings in the 4-dimensional effective action, including non-perturbative contributions to the cosmological constant and non-supersymmetric mass terms.