Word formation by derivation is very productive in Assamese. A significant amount of words in Assamese owe their origin to derivation. The analysis in this paper takes into account the derivational processes related with lexical word categories, and, numerous bound morphemes that are used in the derivational process in the language. This analysis helps us to understand some of the important aspects of Assamese morphology. These aspects are - role of class maintaining and class changing morphemes, derivation of word from synonyms, productivity of derivational morphemes, morphophonemic changes in root as a result of affixation of derivational morphemes, presence of allomorphs of various bound morphemes, ability of a morpheme to derive words from different word categories. The significance of this papers lies in the fact that these word formation processes could help develop morphological rules that can be used for developing computational morphological tools like- stemmer, spell checker, tagger etc.