Derivational morphology is an umbrella term used for concatenative and non-concatenative processes for the formation of new lexemes. In Modern Greek, derivational morphology is one of the major morphological processes along with compounding and inflection. In recent years, research on derivational morphology has evolved rapidly. We present here the state-of-the-art on the recent advances in the derivational morphology of Modern Greek. First, we present affixational derivation by focusing on the main features of the derivational affixes used in Modern Greek and then we present the non-concatenative derivational processes. We also discuss the main theoretical issues related to derivational morphology, that is, constraints, competition and productivity of derivational patterns, and the main theoretical approaches to Modern Greek derivational structures. Finally, we present some general themes of derivational morphology, including the relationship between derivation and other morphological processes and the role of derivational morphology in scientific terminology, language teaching/lexicography and psycholinguistics. We aim to contribute to better understanding of how morphology works by highlighting the potential of research on derivational morphology in Modern Greek.