The article analyses the relations between word formation and phrase formation. More or less clear parallels between the two have been found in compound structures. The main focus is derivation, but as Estonian compounding and derivation belong to the same continuum in more than one sense there is also some discussion of synthetic compounds. The relations of Estonian word formation and syntax are discussed from three aspects. First, it is studied how syntactic principles are reflected in word internal structure, i.e. what the relations are between lexical integrity and phrase structure. Second, a closer look is taken at such word syntactic phenomena that violate lexical integrity, in other words, it is examined to what extent syntactic structures can be incorporated in words. The phenomena under study are coordination of word parts, phrase-based derivation (=when an affix apparently attaches to a whole phrase) and phrase as a component of a compound word (=when entire phrases enter into compounds). Third, it is investigated how the properties of a complex word are reflected in its syntactic behaviour, especially in its argument structure.