  Gauge fields and both adjoint and fundamental Higgs fields are unified in
gauge theory defined on an orbifold. It is shown how the Hosotani mechanism at
the quantum level resolves the problem of the arbitrariness in boundary
conditions imposed at the fixed points of the orbifold. The role of adjoint
Higgs fields in the standard GUT, which are extra-dimensional components of
gauge fields in the current scheme, is taken by the Hosotani mechanism and
additional dynamics governing the selection of equivalence classes of boundary
conditions. The roles of fundamental Higgs fields, namely those of inducing the
electroweak symmetry breaking and giving masses to quarks and leptons, are
taken by the Hosotani mechanism and by extra twists in boundary conditions for
matter. SUSY scenario nicely fits this scheme. Explicit models are given for
the gauge groups U(3) x U(3), SU(5), and SU(6) on the orbifolds M^4 x (S^1/Z_2)
and M^4 x (T^2/Z_2).
