Exposure to a dynamic texture reduces the perceived separation between objects, altering the mapping between physical relations in the environment and their neural representations. Here we investigated the spatial tuning and spatial frame of reference of this aftereffect to understand the stage(s) of processing where adaptation-induced changes occur. In Experiment 1, we measured apparent separation at different positions relative to the adapted area, revealing a strong but tightly tuned compression effect. We next tested the spatial frame of reference of the effect, either by introducing a gaze shift between adaptation and test phase (Experiment 2) or by decoupling the spatial selectivity of adaptation in retinotopic and world-centered coordinates (Experiment 3). Results across the two experiments indicated that both retinotopic and world-centered adaptation effects can occur independently. Spatial attention to the location of the adaptor alone could not account for the world-centered transfer we observed, and retinotopic adaptation did not transfer to world-centered coordinates after a saccade (Experiment 4). Finally, we found that aftereffects in different reference frames have a similar, narrow spatial tuning profile (Experiment 5). Together, our results suggest that the neural representation of local separation resides early in the visual cortex, but it can also be modulated by activity in higher visual areas.