  We investigate the large Nc limit of pure N=2 supersymmetric gauge theory
with gauge group SU(Nc) by using the exact low energy effective action. Typical
one-complex dimensional sections of the moduli space parametrized by a global
complex mass scale v display three qualitatively different regions depending on
the ratio between |v| and the dynamically generated scale Lambda. At large
|v|/Lambda, instantons are exponentially suppressed as N goes to infinity. When
|v| is of order Lambda, singularities due to massless dyons occur. They are
densely distributed in rings of calculable thicknesses in the v-plane. At small
|v|/Lambda, instantons disintegrate into fractional instantons of charge
1/(2N). These fractional instantons give non-trivial contributions to all
orders of 1/N, unlike a planar diagrams expansion which generates a series in
1/N^2, implying the presence of open strings. We have explicitly calculated the
fractional instantons series in two representative examples, including the 1/N
and 1/N^2 corrections. Our most interesting finding is that the 1/N expansion
breaks down at singularities on the moduli space due to severe infrared
divergencies, a fact that has remarkable consequences.
