Our goal in the theoretical portion of the project is to link up experimental studies with theoretical reasoning in morphology. Our ambition is to design and run experiments which are theoretically meaningful, producing results which shed light on issues where the theoretical literature is controversial or gropes in the dark. The particular challenge in derivational morphology is the issue of compositionality. Derivationally complex words are constructions, but unlike syntactic constructions and also inflected wordforms, they are easily lexicalized, with attendant loss of semantic and also formal transparency. Derivational rules can produce novel derivatives; but when lexicalized, they are reproduced and recalled from memory, rather than being newly formed and interpreted on the fly. This characteristic ambivalence of derivational morphology is not well understood, and we expect to be able through processing experiments to target the brain’s special way of dealing with this kind of complexity. Further, an important component of the compositionality of complex words is their historical origins. As part of this project we examine several aspects of the evolution of complexity in Germanic languages, and the ways in which such historical developments impact lexical semantics, syntax, and phonology.