  N=1^* gauge theories are believed to have fractional instanton contributions
in the confining vacua. D3 brane probe computations in gravitation dual of
large-N N=2^* gauge theories point to the absence of such contributions in the
low energy gauge dynamics. We study fractional instantons in N=2 SU(2)
Yang-Mills theory from the field theoretical perspective. We present new
solutions to the Seiberg-Witten SU(2) monodromy problem with the same
perturbative asymptotic, a massless monopole and a dyon singularity on the
moduli space, and fractional instanton corrections to N=2 prepotential in the
semi-classical region of the moduli space. We show that fractional instantons
lead to infinite monopole (dyon) condensate in mass deformed N=2 gauge
theories.
