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Modular design, or "modularity in design", is a design approach that subdivides a system into smaller parts called modules or skids, that can be independently created and then used in different systems. A modular system can be characterized by functional partitioning into discrete scalable, reusable modules, rigorous use of well-defined modular interfaces, and making use of industry standards for interfaces.

Besides reduction in cost (due to less customization, and shorter learning time), and flexibility in design, modularity offers other benefits such as augmentation (adding new solution by merely plugging in a new module), and exclusion. Examples of modular systems are cars, computers, process systems, solar panels and wind turbines, elevators and modular buildings. Earlier examples include looms, railroad signaling systems, telephone exchanges, pipe organs and electric power distribution systems. Computers use modularity to overcome changing customer demands and to make the manufacturing process more adaptive to change (see modular programming).Modular design is an attempt to combine the advantages of standardization (high volume normally equals low manufacturing costs) with those of customization. A downside to modularity (and this depends on the extent of modularity) is that low quality modular systems are not optimized for performance. This is usually due to the cost of putting up interfaces between modules.