It is observed that the three-dimensional BTZ black hole is a supersymmetric solution of the low-energy field equations of heterotic string theory compactified on an Einstein space. The solution involves a non-zero dilaton and NS-NS H-field. The entropy of the extreme black hole can then be computed using string theory and the asymptotic properties of anti-de Sitter space, without recourse to a D-brane analysis. This provides an explicit example of a black hole whose entropy can be computed using fundamental string theory, as advocated by Susskind.