diff --git a/islandora.info b/islandora.info
index fea3ead2..4b48bc29 100644
--- a/islandora.info
+++ b/islandora.info
@@ -18,4 +18,5 @@ files[] = tests/ingest.test
 files[] = tests/hooked_access.test
 files[] = tests/islandora_manage_permissions.test
 files[] = tests/datastream_versions.test
+files[] = tests/derivatives.test
 php = 5.3
diff --git a/islandora.module b/islandora.module
index b8109a21..989dd36e 100644
--- a/islandora.module
+++ b/islandora.module
@@ -1421,31 +1421,75 @@ function islandora_islandora_basic_collection_get_query_filters() {
  * Implements hook_islandora_datastream_ingested().
  */
 function islandora_islandora_datastream_ingested(AbstractObject $object, AbstractDatastream $datastream) {
-  $logging_results = islandora_do_derivatives($object);
-  dd($logging_results, 'logging');
-  foreach ($logging_results as $result) {
+  $logging_results = islandora_do_derivatives($object, array(
+    'source_dsid' => $datastream->id,
+  ));
+  islandora_derivative_logging($logging_results);
+}
 
-  }
+/**
+ * Implements hook_islandora_datastream_modified().
+ */
+function islandora_islandora_datastream_modified(AbstractObject $object, AbstractDatastream $datastream) {
+  $logging_results = islandora_do_derivatives($object, array(
+    'source_dsid' => $datastream->id,
+    'force' => TRUE,
+  ));
+  islandora_derivative_logging($logging_results);
 }
 
-function islandora_do_derivatives(AbstractObject $object, $force = FALSE, $all = TRUE) {
+function islandora_do_derivatives(AbstractObject $object, array $options = array()) {
+  $options += array(
+    'force' => FALSE,
+    'source_dsid' => NULL,
+    'destination_dsid' => NULL,
+  );
   $hooks = islandora_invoke_hook_list(ISLANDORA_DERVIATIVE_CREATION_HOOK, $object->models, array());
   uasort($hooks, 'drupal_sort_weight');
   $results = array();
-  dd($hooks, 'hooks');
+
+  if ($options['source_dsid'] !== NULL) {
+    $hooks = array_filter($hooks, function($filter_hook) use($options) {
+      return !isset($filter_hook['source_dsid']) ||
+      (isset($filter_hook['source_dsid']) && $filter_hook['source_dsid'] == $options['source_dsid']);
+    });
+  }
+  if ($options['destination_dsid'] !== NULL) {
+    $hooks = array_filter($hooks, function($filter_hook) use($options) {
+      return !isset($filter_hook['destination_dsid']) ||
+      (isset($filter_hook['destination_dsid']) && $filter_hook['destination_dsid'] == $options['destination_dsid']);
+    });
+  }
+  dd($hooks, 'hooooooks');
   foreach ($hooks as $hook) {
-    if (!$all && !isset($hook['source_dsid'])) {
-      continue;
-    }
     if (isset($hook['file'])) {
-       require_once($hook['file']);
+      require_once $hook['file'];
     }
     foreach ($hook['function'] as $function) {
-      $logging = call_user_func($function, $object, $force);
+      $logging = call_user_func($function, $object, $options['force']);
       if (!empty($logging)) {
         $results[] = $logging;
       }
     }
   }
   return $results;
+}
+
+function islandora_derivative_logging(array $logging_results) {
+  foreach ($logging_results as $result) {
+    foreach ($result['messages'] as $message) {
+      if ($message['type'] >= WATCHDOG_WARNING) {
+        if ($message['type'] == WATCHDOG_WARNING) {
+          $status = 'warning';
+        }
+        else {
+          $status = 'status';
+        }
+        drupal_set_message(format_string($message['message'], isset($message['message_sub']) ? $message['message_sub'] : array()), $status);
+      }
+      else {
+        watchdog('islandora', $message['message'], isset($message['message_sub']) ? $message['message_sub'] : array(), $message['type']);
+      }
+    }
+  }
 }
\ No newline at end of file
diff --git a/tests/derivatives.test b/tests/derivatives.test
new file mode 100644
index 00000000..a98753f7
--- /dev/null
+++ b/tests/derivatives.test
@@ -0,0 +1,185 @@
+<?php
+
+/**
+ * @file
+ * Tests to see if the hooks get called when appropriate.
+ *
+ * In the test module 'islandora_derivatives_test' there are implementations
+ * of hooks being tested. These implementations modifies the session, and
+ * that's how we test if the hook gets called.
+ *
+ * To make sense of these tests reference islandora_derivatives_test.module.
+ */
+
+class IslandoraDerivativesTestCase extends IslandoraWebTestCase {
+
+  /**
+   * Gets info to display to describe this test.
+   *
+   * @see IslandoraWebTestCase::getInfo()
+   */
+  public static function getInfo() {
+    return array(
+      'name' => 'Islandora Derivative Generation',
+      'description' => 'Ensure that the derivative generation hooks return appropriate results.',
+      'group' => 'Islandora',
+    );
+  }
+
+  /**
+   * Creates an admin user and a connection to a fedora repository.
+   *
+   * @see IslandoraWebTestCase::setUp()
+   */
+  public function setUp() {
+    parent::setUp(
+      array(
+      'islandora_derivatives_test',
+      )
+    );
+    $url = variable_get('islandora_base_url', 'http://localhost:8080/fedora');
+    $this->connection = new RepositoryConnection($url, $this->admin->name, $this->admin->pass);
+    $this->connection->reuseConnection = TRUE;
+    $this->api = new FedoraApi($this->connection);
+    $this->cache = new SimpleCache();
+    $this->repository = new FedoraRepository($this->api, $this->cache);
+    $this->pid = $this->randomName() . ":" . $this->randomName();
+  }
+
+  /**
+   * Free any objects/resources created for this test.
+   *
+   * @see IslandoraWebTestCase::tearDown()
+   */
+  public function tearDown() {
+    $tuque = islandora_get_tuque_connection();
+    parent::tearDown();
+  }
+
+  public function testDerivativeOnIngest() {
+    global $ingest_method;
+    $ingest_method = 'modifyDatastream';
+    $tuque = islandora_get_tuque_connection();
+    $object = $tuque->repository->constructObject($this->pid);
+    $object->models = array(
+      'some:cmodel',
+    );
+    $dsid = 'OBJ';
+    $ds = $object->constructDatastream($dsid);
+    $ds->label = 'Test';
+    $ds->content = 'test';
+    $object->ingestDatastream($ds);
+    $tuque->repository->ingestObject($object);
+    $this->assertDatastreams($object, array(
+      'RELS-EXT',
+      'DC',
+      'OBJ',
+      'DERIV',
+    ));
+    $this->assertEqual('ingestDatastream', $ingest_method, 'The expected ingest method is "ingestDatastream", got "' . $ingest_method . '".');
+    $this->assertEqual('test some string', $object['DERIV']->content, 'The expected content of the DERIV datastream is "test some string", got "' . $object['DERIV']->content . '".');
+  }
+
+ public function testDerivativeOnForceExistingDatastream() {
+    global $ingest_method;
+    $ingest_method = 'ingestDatastream';
+    $object = $this->constructBaseObject();
+    $this->constructDERIVDatastream($object);
+    $islandora_object = islandora_object_load($this->pid);
+    islandora_do_derivatives($islandora_object, array(
+      'force' => TRUE,
+    ));
+    $this->assertEqual('modifyDatastream', $ingest_method, 'The expected ingest method is "modifyDatastream", got "' . $ingest_method . '".');
+    $this->assertEqual('FORCEFULLY APPENDING CONTENT TO test', $islandora_object['DERIV']->content, 'The expected content of the DERIV datastream is "FORCEFULLY APPENDING CONTENT TO test", got "' . $islandora_object['DERIV']->content . '".');
+  }
+
+  public function testDerivativeOnForceNonExistingDatastream() {
+    global $ingest_method;
+    $ingest_method = 'modifyDatastream';
+    $this->constructBaseObject();
+    $object = islandora_object_load($this->pid);
+    islandora_do_derivatives($object, array(
+      'force' => TRUE,
+    ));
+    $this->assertEqual('ingestDatastream', $ingest_method, 'The expected ingest method is "ingestDatastream", got "' . $ingest_method . '".');
+    $this->assertEqual('FORCEFULLY APPENDING CONTENT TO test', $object['DERIV']->content, 'The expected content of the DERIV datastream is "FORCEFULLY APPENDING CONTENT TO test", got "' . $object['DERIV']->content . '".');
+  }
+
+  public function testDerivativeOnModifyExistingDatastream() {
+    global $ingest_method;
+    $ingest_method = 'ingestDatastream';
+    $object = $this->constructBaseObject();
+    $this->constructDERIVDatastream($object);
+    $connection = islandora_get_tuque_connection();
+    $connection->cache->resetCache();
+    $islandora_object = islandora_object_load($this->pid);
+    $changed_content = 'islandora beast';
+    $islandora_object['OBJ']->content = $changed_content;
+    $this->assertEqual('modifyDatastream', $ingest_method, 'The expected ingest method is "modifyDatastream", got "' . $ingest_method . '".');
+    $this->assertEqual('FORCEFULLY APPENDING CONTENT TO ' . $changed_content, $islandora_object['DERIV']->content, 'The expected content of the DERIV datastream is "FORCEFULLY APPENDING CONTENT TO islandora beast", got "' . $islandora_object['DERIV']->content . '".');
+  }
+
+  public function testDerivativeOnModifyNonExistingDatastream() {
+    global $ingest_method;
+    $ingest_method = 'modifyDatastream';
+    $this->constructBaseObject();
+    // Need to do this as Tuque caches.
+    $connection = islandora_get_tuque_connection();
+    $connection->cache->resetCache();
+    $islandora_object = islandora_object_load($this->pid);
+    $changed_content = 'islandora beast';
+    $islandora_object['OBJ']->content = $changed_content;
+    $this->assertEqual('ingestDatastream', $ingest_method, 'The expected ingest method is "ingestDatastream", got "' . $ingest_method . '".');
+    $this->assertEqual('FORCEFULLY APPENDING CONTENT TO ' . $changed_content, $islandora_object['DERIV']->content, 'The expected content of the DERIV datastream is "FORCEFULLY APPENDING CONTENT TO islandora beast", got "' . $islandora_object['DERIV']->content . '".');
+  }
+
+  public function testDerivativeFilteringOnSourceDSID() {
+    global $derivative_functions;
+    $derivative_functions = array();
+    $this->constructBaseObject();
+    $object = islandora_object_load($this->pid);
+    islandora_do_derivatives($object, array(
+      'source_dsid' => 'OBJ',
+    ));
+    $this->assertEqual(1, count($derivative_functions), 'Expected 1 derivative function for the source_dsid of "OBJ", got ' . count($derivative_functions) . '.');
+    $called_function = (string) reset($derivative_functions);
+    $this->assertEqual('islandora_derivatives_test_create_deriv_datastream', $called_function, 'Expected derivative function is "islandora_derivatives_test_create_deriv_datastream", got "' . $called_function . '".');
+
+    // Reset the derivative functions array as we are going to use it again.
+    $derivative_functions = array();
+    islandora_do_derivatives($object, array(
+      'source_dsid' => 'SOMEWEIRDDATASTREAM',
+    ));
+    $this->assertEqual(1, count($derivative_functions), 'Expected 1 derivative function for the source_dsid of "SOMEWEIRDDATASTREAM", got ' . count($derivative_functions) . '.');
+    $called_function = (string) reset($derivative_functions);
+    $this->assertEqual('islandora_derivatives_test_create_some_weird_datastream', $called_function, 'Expected derivative function is "islandora_derivatives_test_create_some_weird_datastream", got "' . $called_function . '".');
+  }
+
+  /**
+   * Helper function that will construct a base object.
+   */
+  public function constructBaseObject() {
+    $object = $this->repository->constructObject($this->pid);
+    $object->models = array(
+      'some:cmodel',
+    );
+    $dsid = 'OBJ';
+    $ds = $object->constructDatastream($dsid);
+    $ds->label = 'Test';
+    $ds->content = 'test';
+    $object->ingestDatastream($ds);
+    $this->repository->ingestObject($object);
+    return $object;
+  }
+
+  public function constructDERIVDatastream(AbstractObject $object) {
+    $dsid = 'DERIV';
+    $ds = $object->constructDatastream($dsid);
+    $ds->label = 'Test';
+    $ds->content = 'test';
+    $object->ingestDatastream($ds);
+    return $object;
+  }
+
+  }
+
diff --git a/tests/islandora_derivatives_test.info b/tests/islandora_derivatives_test.info
new file mode 100644
index 00000000..338b39fe
--- /dev/null
+++ b/tests/islandora_derivatives_test.info
@@ -0,0 +1,7 @@
+name = Islandora Derivatives Generation testing
+description = Tests derivative generation hooks. Do not enable.
+core = 7.x
+package = Testing
+hidden = TRUE
+files[] = islandora_derivatives_test.module
+dependencies[] = islandora
diff --git a/tests/islandora_derivatives_test.module b/tests/islandora_derivatives_test.module
new file mode 100644
index 00000000..36b6380c
--- /dev/null
+++ b/tests/islandora_derivatives_test.module
@@ -0,0 +1,114 @@
+<?php
+
+/**
+ * @file
+ * Tests for derivative generation.
+ */
+
+/**
+ * Implements hook_islandora_CMODEL_derivative().
+ */
+function islandora_derivatives_test_some_cmodel_islandora_derivative() {
+  return array(
+    array(
+      'source_dsid' => 'OBJ',
+      'destination_dsid' => 'DERIV',
+      'weight' => '0',
+      'function' => array(
+        'islandora_derivatives_test_create_deriv_datastream',
+      ),
+    ),
+    array(
+      'source_dsid' => 'SOMEWEIRDDATASTREAM',
+      'destination_dsid' => 'STANLEY',
+      'weight' => '-1',
+      'function' => array(
+        'islandora_derivatives_test_create_some_weird_datastream',
+      ),
+    ),
+  );
+}
+
+function islandora_derivatives_test_create_deriv_datastream(AbstractObject $object, $force = FALSE) {
+  global $derivative_functions;
+  $derivative_functions[] = 'islandora_derivatives_test_create_deriv_datastream';
+  $return = '';
+  if (!isset($object['DERIV']) || (isset($object['DERIV']) && $force === TRUE)) {
+    if ($force !== TRUE) {
+      $deriv_string = $object['OBJ']->content . ' some string';
+    }
+    else {
+      $deriv_string = "FORCEFULLY APPENDING CONTENT TO " . $object['OBJ']->content;
+    }
+    $added_successfully = islandora_derivatives_test_add_datastream($object, 'DERIV', $deriv_string);
+    if ($added_successfully !== TRUE) {
+      $return = islandora_derivatives_test_failed_adding($added_successfully);
+    }
+    else {
+      $return = array(
+        'success' => TRUE,
+        'messages' => array(
+          array(
+            'message' => t('The DERIV datastream was added successfully for @pid!'),
+            'message_sub' => array('@pid' => $object->id),
+            'type' => WATCHDOG_INFO,
+          ),
+        ),
+      );
+    }
+    return $return;
+  }
+}
+
+/**
+ * Stub function that should never actually get called because of DSID filtering.
+ *
+ * @param AbstractObject $object
+ *   An AbstractObject representing a Fedora object.
+ * @param bool $force
+ *   Whether the derivatives are being forcefully generated or not.
+ */
+function islandora_derivatives_test_create_some_weird_datastream(AbstractObject $object, $force = FALSE) {
+  global $derivative_functions;
+  // Add to the global that we got to this function.
+  $derivative_functions[] = 'islandora_derivatives_test_create_some_weird_datastream';
+}
+
+function islandora_derivatives_test_add_datastream(AbstractObject $object, $dsid, $deriv_string) {
+  global $ingest_method;
+  try {
+    $ingest = !isset($object[$dsid]);
+    if ($ingest) {
+      $ds = $object->constructDatastream($dsid, 'M');
+      $ds->label = $dsid;
+    }
+    else {
+      $ds = $object[$dsid];
+    }
+    $ds->content = $deriv_string;
+    if ($ingest) {
+      $ingest_method = 'ingestDatastream';
+      $object->ingestDatastream($ds);
+    }
+    else {
+      $ingest_method = 'modifyDatastream';
+    }
+    return TRUE;
+  }
+  catch (exception $e) {
+    $message = $e->getMessage();
+    return $message;
+  }
+}
+
+function islandora_derivatives_test_failed_adding($message) {
+  return array(
+    'success' => FALSE,
+    'messages' => array(
+      array(
+        'message' => $message,
+        'type' => WATCHDOG_ERROR,
+      ),
+    ),
+  );
+}
\ No newline at end of file