The paper sums up research conducted in the past few years in the Psycholinguistics Lab (Warsaw University) concerning the acquisition of word-formation rules in Polish children. Results of the research are presented in the broader context of research on development of the lexicon in children and of general research on the structure of the mental lexicon. The authoress indicates how research on word-formation development (including cross-cultural studies) can help to solve both theoretical problems of the structure of the mental lexicon and problems of language acquisition. Studies on children acquiring Polish indicate a very early productive use of some derivational categories (e.g., diminutives). Experimental research with reaction time measurement showed earlier understanding of derived words with simpler internal structure (modifications) as compared with words of more complex structure (mutations). The processing cost of modifications in children age 2–4 is equal to that of non-derived (simple) words, while mutations require more time (when length and frequency of words are controlled). This difference disappears at age 5 which may indicate a process of automation in the processing of derived words. The paper suggests research methods that can be employed for better insight into the functioning of complex (derived) words in the mental lexicon of children.