  We study M(atrix) theory description of M theory compactified on T5/Z2
orbifold. In the large volume limit we show that M theory dynamics is described
by N=8 supersymmetric USp(2N) M(atrix) quantum mechanics. Via zero-brane parton
scattering, we show that each orbifold fixed point carries anomalous G-flux
$\oint [G/2 \pi]= - 1/2$. To cancel the anomalous G-flux, we introduce twisted
sector consisting of sixteen five-branes represented by fundamental
representation hypermultiplets. In the small volume limit we show that M theory
dynamics is described by by (5+1)-dimensional (8,0) supersymmetric USp(2N)
chiral gauge theory. We point out that both perturbative and global gauge
anomalies are cancelled by the sixteen fundamental representation hyper-
multiplets in the twisted sector. We show that M(atrix) theory is capable of
turning on spacetime background with the required sixteen five-branes out of
zero-brane partons as bound-states. We determine six-dimensional spacetime
spectrum from the M(atrix) theory for both untwisted and twisted sectors and
find a complete agreement with the spectrum of (2,0) supergravity. We discuss
M(atrix) theory description of compactification moduli space, symmetry enhance-
ment thereof as well as further toroidal compactifications.
