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One of the most enduring problems in Spanish phonology has been the appearance of unstressed diphthongs in words with derivational suffixes. Despite robust conditioning of the diphthong alternation by stress, which predicts monophthongs in such words, derivational suffixes exhibit gradient tolerance for diphthongs. Moreover, speakers' intuitions appear to be keenly sensitive to this variability among suffixes. In this article we present corpus data identifying productivity as a crucial property of suffixes predicting the occurrence of diphthongs in extant Spanish derivations. This finding allows us to link the distribution of diphthongs to a more general, crosslinguistic tendency for words with productive morphology to be phonologically marked. We then present experimental results from lexical decision showing that this relationship between phonology and morphology drives not only Spanish speakers' intuitions but also their real-time processing of novel derivations. In addition to offering a solution to a long-standing problem in Spanish phonology, these findings have profound implications for our understanding of the phonology-morphology interface. Our corpus and experimental results conceptually motivate an argument that the contrasting demands of compositional and holistic processing of polymorphemic words play a crucial role in the increased incidence of marked phonology in particular morphological contexts.