Our research on this project constitutes a combined theoretical and experimental endeavour to shed light on the question of complexity in derivational morphology and on how complexity is reflected in word processing on the evidence of brain signatures. Experimental approaches to derivation have often been hampered by overly simplistic assumptions about the structural domain of word formation (or more precisely lexeme formation, as distinct from wordform formation as in inflectional morphology). The central debate has been about whether words (lexemes) are or are not decomposed in the mental lexicon, and it has remained somewhat unclear how morphological relatedness is founded on form overlap and/or semantic compositionality, and what the role of frequencies of occurrence is in processing derived words. The planned research compares English and German, which are related languages with comparable but not identical linguistic structures. For example, suffixation and prefixation prevail and allow morpho-phonological alternations in both languages. Nevertheless, there are systematic phonological differences (e.g., stress alternations in English, umlaut alternations in German), and the morphological categories involved in derivation are not identical, either (e.g., gender is only relevant in German). There has been both behavioural as well as brain-imaging data from our own labs that suggests that the depth of morphological derivation does affect processing, but as yet we have not investigated the time-course of this effect, nor have we systematically manipulated phonological alternations in derivation. This will be investigated in a series of electrophysiological studies in German and English. We will be able to compare different types of morphological complexities, with and without phonological alternations, and our results will also allow us to make cross-linguistic generalisations in a way which is not possible when examining a single language, as is still the rule in experimental morphology.