  The BPS spectrum of type I' string theory in a generic background is derived
using the duality with the nine-dimensional heterotic string theory with Wilson
lines. It is shown that the corresponding mass formula has a natural
interpretation in terms of type I', and it is demonstrated that the relevant
states in type I' preserve supersymmetry. By considering certain BPS states for
different Wilson lines an independent confirmation of the string creation
phenomenon in the D0-D8 system is found. We also comment on the
non-perturbative realization of gauge enhancement in type I', and on the
predictions for the quantum mechanics of type I' D0-branes.
