  I calculate the emission expected from a Poynting-flux-dominated gamma-ray
burst (GRB) flow in which energy is dissipated gradually by magnetic
reconnection. In this picture, the energy of the radiating particles is
determined by heating and cooling balance (slow heating model). Detailed
radiative transfer calculations show that, at Thomson optical depths of order
of unity, the dominant radiative process is inverse Compton scattering.
Synchrotron-self-absorbed emission and inverse Compton dominate in the Thomson
thin parts of the flow. The electrons stay thermal throughout the dissipation
region because of Coulomb collisions (Thomson thick part of the flow) and
exchange of synchrotron photons (Thomson thin part). The resulting spectrum
naturally explains the observed sub-MeV break of the GRB emission and the
spectral slopes above and below the break. The model predicts that the
gamma-ray power-law tail has a high-energy cutoff typically in the ~0.1-1 GeV
energy range that should be observable with {\it GLAST}. The model also
predicts a prompt emission component in the optical and UV associated with the
GeV emission. Observations of the prompt emission of GRB 061121 that cover the
energy range from the optical to ~1 MeV are explained by the model.
