Full Definition of DERIVATION. 1. a (1) : the formation of a word from another word or base (as by the addition of a usually noninflectional affix) (2) : an act of ascertaining or stating the derivation of a word (3) : etymology 1 b: the relation of a word to its base.2. a: source, origin b: descent, origination.3. : something derived: derivative.efinition of DERIVATION for Kids. 1. : the formation of a word from an earlier word or root. 2. : etymology. 3. 4. : an act or process by which one thing is formed from another.