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Abstract Explaining large‐scale ordered patterns and their effects on ecosystem functioning is a fundamental and controversial challenge in ecology. Here, we coupled empirical and theoretical approaches to explore how competition and spatial heterogeneity govern the regularity of colony dispersion in fungus‐farming termites. Individuals from different colonies fought fiercely, and inter‐nest distances were greater when nests were large and resources scarce—as expected if competition is strong, large colonies require more resources and foraging area scales with resource availability. Building these principles into a model of inter‐colony competition showed that highly ordered patterns emerged under high resource availability and low resource heterogeneity. Analysis of this dynamical model provided novel insights into the mechanisms that modulate pattern regularity and the emergent effects of these patterns on system‐wide productivity. Our results show how environmental context shapes pattern formation by social‐insect ecosystem engineers, which offers one explanation for the marked variability observed across ecosystems.