We study the renormalization of non-commutative gauge theories with matter. As in the scalar field theory cases, there are logarithmic infrared divergences resulting from integrating out high momentum modes. In order to reproduce the correct infrared behaviour, the wilsonian effective action has to include certain ``closed string'' modes with prescribed couplings. In the case of quiver gauge theories, realized in string theory on orbifolds, we identify the required modes with a set of twisted sector fields. These closed string modes have exactly the prescribed couplings to correct the wilsonian effective action. This provides a concrete origin for the appearance of closed string modes in noncommutative field theories.