Recent measurements of event-by-event elliptic flow in Au+Au collisions at √SNN = 200GeV exhibit large relative fluctuations of about 40%-50%. The data are well described by fluctuations in the shape of the initial collision region, as estimated event-by-event with the participant eccentricity using Glauber Monte Carlo. These results, combined with the demonstrated participant eccentricity scaling of the elliptic flow across nuclear species, constitute evidence of transverse granularity in the initial matter production in these collisions.