This paper is an analysis of the complicated facts of Polish palatalization known as Iotation from two perspectives: that of Derivational Theory and that of Optimality Theory. It is argued that Optimality Theory predicts an allomorphy treatment of Iotation, which in fact is desirable for a synchronic analysis. While the allomorphs are arbitrary as a consequence of diachronic processes, their distribution is not. It follows from the interaction of universal phonological constraints.