We study D1-branes on the fourfold C 4 /(Z 2 × Z 2 × Z 2 ), in the presence of discrete torsion. Discrete torsion is incorporated in the gauge theory of the D1-branes by considering a projective representation of the finite group Z 2 × Z 2 × Z 2 . The corresponding orbifold is then deformed by perturbing the F-flatness condition of the gauge theory. The moduli space of the resulting gauge theory retains a stable singularity of codimension three.