This literature-based thesis studies the phenomenon of the regular plural inside compounds according to Giegerich’s (1999) stratal model of English morphology. The strata of his model are defined by their bases: stratum 1 is root-based and stratum 2 is word-based. The model overcomes the failings associated with earlier stratal models defined by their affixes (e.g., Kiparsky, 1982). However, assigning compounding and the regular plural to the same word stratum following Giegerich’s (1999) model leaves an open question in terms of what restricts the interaction between both rules to prevent the generation of ill-formed compounds such as *toys box and *trucks driver. Another question emerges: Should the regular plural inflection be assigned to stratum 2? This question is important because the answer affects how we discuss the interaction between the regular plural and compounding. For example, how do we account for the interaction between a stratum-2 rule and a syntactic rule if we are not dealing with an interaction of two lexical rules at the same stratum? This thesis challenges the theory that inflectional morphology is separate from the lexicon (Anderson, 1988, 1982; Perlmutter, 1988) with supporting evidence from the properties of the possessive inflection. This research contributes significantly to the literature in its analysis of a number of compounds within texts extracted from books, which demonstrates that the internal regular plural morpheme has an evident semantic function that restricts it from appearing inside compounds (that is, on stratum 2 of the base-driven stratification model). The study thereby challenges Lieber and Štekauer’s (2009) view that the internal regular plural morpheme is purposeless and therefore should be regarded as a linking element. I also argue that the possessive inflection is assigned to stratum 2 and can interact with compounding to form possessive compounds, but is restricted by the semantic feature of the non-head element.