We develop a method to compute the one-loop effective action of noncommutative U(1) gauge theory based on the bosonic worldline formalism, and derive compact expressions for N-point 1PI amplitudes. The method, resembling perturbative string computations, shows that open Wilson lines emerge as a gauge invariant completion of certain terms in the effective action. The terms involving open Wilson lines are of the form reminiscent of closed string exchanges between the states living on the two boundaries of a cylinder. They are also consistent with recent matrix theory analysis and the results from noncommutative scalar field theories with cubic interactions. (C) 2002 Elsevier Science B.V. All rights reserved.