We study a bound state of fractional D3-branes localized inside the world-volume of fractional D7-branes on the orbifold C^3/Z_2 x Z_2. We determine the open string spectrum that leads to N=1 U(N1)xU(N2)xU(N3)xU(N4) gauge theory with matter having the number of D7-branes as a flavor index. We derive the linearized boundary action of the D7-brane on this orbifold using the boundary state formalism and we discuss the tadpole cancellation. After computing the asymptotic expression of the supergravity solution the anomalies of the gauge theory are reproduced.
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