—Model-Driven Engineering (MDE) promotes models throughout development. However, models may become large and unwieldy even for small to medium-sized systems. This paper tackles the MDE challenges of model complexity and scalability. It proposes FRAGMENTA, a theory of modular design that breaks down overall models into fragments that can be put together to build meaningful wholes, in contrast to classical MDE approaches that are essentially monolithic. The theory is based on an algebraic description of models, fragments and clusters based on graphs and morphisms. The paper’s novelties include: (i) a mathematical treatment of fragments and a seaming mechanism of proxies to enable inter-fragment referencing, (ii) fragmentation strategies, which prescribe a fragmentation structure to model instances, (iii) FRAGMENTA’s support for both top-down and bottom-up design, and (iv) our formally proved result that shows that inheritance hierarchies remain well-formed (acyclic) globally when f...