This study investigates brain potentials to derived word forms in Spanish. Two experiments were performed on derived nominals that differ in terms of their productivity and semantic properties but are otherwise similar, an acceptability judgment task and a reading experiment using event-related brain potentials (ERPs) in which correctly and incorrectly formed derived words were presented in sentence contexts. The first experiment indicated productivity differences between the different nominalization processes in Spanish. The second experiment yielded a pattern of ERP responses that differed from both the familiar lexical-semantic and grammatical ERP effects. Violations of derivational morphology elicited an increased N400 component plus a late positivity (P600), unlike gender-agreement violations, which produced the biphasic LAN/P600 ERP pattern known from previous studies of morpho-syntactic violations. We conclude that the recognition of derived word forms engages both word-level (lexical-semantic) and decompositional (morpheme-based) processes. (Contains 5 tables and 6 figures.)