This chapter presents a constructional theory of compounding that makes use of some basic ideas of Construction Grammar, in particular constructional schemas, and the idea of a hierarchical lexicon (with multiple linking between words, and intermediate nodes between the most abstract schemas and the individual lexical items in order to express intermediate levels of generalization). Specifically, it provides morphological argumentation in support of such a view of morphology and the lexicon – a view referred to as Construction Morphology – and is organized as follows. Section 10.2 spells out some basic assumptions concerning the role of word-formation schemas in the lexicon, and shows how they can be applied in the analysis of endocentric compounds. Section 10.3 discusses the issue of headedness in relation to various categories of compounds. Section 10.4 focuses on synthetic compounds. Section 10.5 shows how Construction Grammar enables us to give an insightful account of compound-like phrases. Section 10.6 presents a summary of findings.