This lecture discusses compounding as a major type of word formation in modern English lexicology. It covers the definition of compounds, ways of their formation, semantic and structural motivation in compounds, coordinative and subordinate compounds, classification of compounds according to different criteria, and the correlation between compounds and phraseological units. Compound words are formed by joining two or more stems, examples include: taxi-driver, music-box, keyboard, blue-eyed, cross-legged, lop-sided, bookcase, looking glass, etc.