A unique topographical representation of space is found in the concerted activity of grid cells in the rodent medial entorhinal cortex. Many among the principal cells in this region exhibit a hexagonal firing pattern, in which each cell expresses its own set of place fields (spatial phases) at the vertices of a triangular grid, the spacing and orientation of which are typically shared with neighboring cells. Grid spacing, in particular, has been found to increase along the dorso-ventral axis of the entorhinal cortex but in discrete steps, that is, with a modular structure. In this study, we show that such a modular activity may result from the self-organization of interacting units, which individually would not show discrete but rather continuously varying grid spacing. Within our adaptation network model, the effect of a continuously varying time constant, which determines grid spacing in the isolated cell model, is modulated by recurrent collateral connections, which tend to produce a few subnetworks, akin to magnetic domains, each with its own grid spacing. In agreement with experimental evidence, the modular structure is tightly defined by grid spacing, but also involves grid orientation and distortion, due to interactions across modules. Thus, our study sheds light onto a possible mechanism, other than simply assuming separate networks a priori, underlying the formation of modular grid representations.