We considered a model for the prompt phase of Gamma-Ray Burst (GRB) emission arising from a magnetized jet undergoing gradual energy dissipation due to magnetic reconnection. The dissipated magnetic energy is translated to bulk kinetic energy and to acceleration of particles. The energy in these particles is released via synchrotron radiation as they gyrate around the strong magnetic fields in the jet. At small radii, the optical depth is large, and the radiation is reprocessed through Comptonization into a narrow, strongly peaked, component. At larger distances the optical depth becomes small and radiation escapes the jet with a non-thermal distribution. The obtained spectra typically peak around $\approx 300$keV (as observed) and with spectral indices below and above the peak that are, for a broad range of the model parameters, close to the observed values. The small radius of dissipation causes the emission to become self absorbed at a few keV and can sufficiently suppress the optical and X-ray fluxes within the limits required by observations (Beniamini & Piran 2014).