The purposes of this study were (1) to investigate changes in knowledge acquired by children between the ages of 8 and 17, with respect to certain complex word-derivation processes and (2) to investigate the relation of the changes in children's knowledge of word derivation to various aspects of their reading achievement. The study used ten words as models for creating nonce pairs of words for testing children's knowledge of five sound patterns--dental stops, two kinds of vowel shifts, and two kinds of stress shifts. Seventy-two children from grades 3, 6, 9, and 12 participated in the study; one-third of the children were poor readers, one-third were average, and one-third were good readers. Three tests of oral language competency with the five sound patterns were administered: a production test, a test of ability to judge which of two derived words sounded better, and a recall test. The results showed significant differences in the phonological competence of children between the ages of 8 and 17. For third graders, the memory test correlated with all measures of reading; for the children in the upper grades, the memory test correlated best with word recognition ability. The relationship between intelligence and lexical knowledge was not statistically significant within any grade. (Author/LL)