Rules of lexical derivation can be used to account for certain case-related regularities existing between Japanese non-potential verbs and the potential verbs derived from them. Lexical derivation analysis in comparison with a transformational approach is simpler; it requires less powerful rules and therefore makes a stronger claim; and it captures the native speaker's intuition that a particular potential-verb combination is a verb having its own cooccurrence possibilities but related to a corresponding non-potential verb in a predictable way. This paper discusses the lexical derivation approach and provides numerous examples of its use in the analysis of Japanese verbs and appropriate sentence structure. (Author/VM)