On the evidence of four lexical-decision tasks in German, we examine speakers' sensitivity to internal morphological composition and abstract morphological rules during the processing of derived words, real and novel. In a lexical-decision task with delayed priming, speakers were presented with two-step derived nouns such as "Heilung healing" derived from the adjective "heil intact" via the verb "heilen to heal." These were compared with two sets of derived novel words, one with and the other without an intermediate verb; for example, "*Spitzung sharpening" from "spitz sharp via "spitzen sharpen" (Experiment 1) and "*Hübschung beautifying" from "hübsch pretty" via "*hübschen "beautify" (Experiment 2). The question was whether there would be a difference between the two types of novel words. Both sets were morphologically viable in terms of combinatory possibilities. Results indicated that extant and novel complex words activated their respective base forms; that is, "Heilung, *Spitzung, *Hübschung" all primed "heil, spitz, hübsch." Both sets of novel words were then combined in a third (delayed priming) experiment, where again they primed their bases, but were nevertheless significantly different from each other. Items with real words in the intermediate position ("*Spitzung") showed stronger priming effects. Controls that were only related in form or semantics did not prime; neither did structurally unviable pseudowords show priming. A final experiment (Experiment 4), comparing the two types of novel words ("*Spitzung" vs. "*Hübschung") in a simple lexical-decision task, also revealed significant differences across these sets, suggesting that the lexical status of the intermediate derivation affects the processing of novel forms.