We obtain an effective field theory of an internal string by constructing a gauge theory of the Virasoro-Kac-Moody symmetry associated with $P\otimes G$, where $P$ is the Poincaré group and $G$ is the grand unification group. The theory automatically breaks the Virasoro-Kac-Moody group down to $P\otimes H\otimes \mathrm{U}\mathrm{}\left(1\right)\mathrm{}$, where $H$ is a subgroup of $G$ and U(1) is the Cartan subgroup of the Virasoro group. After the spontaneous symmetry breaking the mass spectrum of the theory is characterized by two completely different mass scales: the Planck scale which is responsible for the harmonic oscillator spectrum of the string and the elementary particle scale which is responsible for the fine structure of the mass spectrum. The theory allows a straightforward supersymmetric generalization.

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