This study investigated students' knowledge of derivational morphology and the relationship between this knowledge and their ability to spell derived words. The subjects (fourth, sixth and eighth graders) were given the Wide Range Achievement Test, Spelling subtest, and experimental tests of their ability to generate base and derived forms orally, to spell the same base and derived words, and to apply suffix addition rules. The results indicate strong developmental trends in both the mastery of derivational morphology and the spelling of derived words; however, spelling performances lagged significantly behind the ability to generate the same words. Success generating and spelling derived words depended on the complexity of transformations between base and derived forms. Further, mastery of phonological and orthographic transformations most strongly distinguished the three grades in both spelling and generating derived words. Indications that the older students were using knowledge of morphemic structure in spelling derived words were found in analysis of the spelling of base and derived word pairs and the application of suffix addition rules.