diff --git a/src/runtime/reactivity.ts b/src/runtime/reactivity.ts
index 12d61a7d5..96f98d731 100644
--- a/src/runtime/reactivity.ts
+++ b/src/runtime/reactivity.ts
@@ -227,6 +227,30 @@ export function reactive<T extends Target>(target: T, callback: Callback = NO_CA
     const proxy = new Proxy(target, handler as ProxyHandler<T>) as Reactive<T>;
     reactivesForTarget.set(callback, proxy);
     targets.set(proxy, target);
+    // FIXME: this probably slows down reactive creation significantly, we probably don't want to do
+    // it all the time. Maybe should be a separate function.
+    const derivedDescriptors = Object.entries(Object.getOwnPropertyDescriptors(target)).filter(
+      ([k, descriptor]) => {
+        if (toRaw(descriptor.value)?.[IS_DERIVED_DESCRIPTOR]) {
+          delete target[k as keyof typeof target]; // prevent circular call in effect below
+          return true;
+        }
+        return false;
+      }
+    );
+    for (const [
+      key,
+      {
+        value: [deps, compute],
+      },
+    ] of derivedDescriptors) {
+      effect(
+        (proxy, deps) => {
+          proxy[key as keyof typeof proxy] = Reflect.apply(compute, proxy, deps);
+        },
+        [proxy, deps]
+      );
+    }
   }
   return reactivesForTarget.get(callback) as Reactive<T>;
 }
@@ -463,3 +487,18 @@ function collectionsProxyHandler<T extends Collection>(
     },
   }) as ProxyHandler<T>;
 }
+
+const IS_DERIVED_DESCRIPTOR = Symbol("is derived descriptor");
+export function derived<T extends Reactive<any>[], U>(deps: T, compute: (...args: T) => U) {
+  return Object.assign([deps, compute], { [IS_DERIVED_DESCRIPTOR]: true }) as unknown as U;
+}
+
+/**
+ * Creates a side-effect that runs based on the content of reactive objects.
+ */
+export function effect<T extends object[]>(cb: (...args: [...T]) => void, deps: [...T]) {
+  const reactiveDeps = reactive(deps, () => {
+    cb(...reactiveDeps);
+  });
+  cb(...reactiveDeps);
+}
diff --git a/tests/reactivity.test.ts b/tests/reactivity.test.ts
index bad028cd8..234c502bd 100644
--- a/tests/reactivity.test.ts
+++ b/tests/reactivity.test.ts
@@ -9,7 +9,7 @@ import {
   markRaw,
   toRaw,
 } from "../src";
-import { reactive, getSubscriptions } from "../src/runtime/reactivity";
+import { reactive, getSubscriptions, derived } from "../src/runtime/reactivity";
 import { batched } from "../src/runtime/utils";
 import {
   makeDeferred,
@@ -2424,3 +2424,156 @@ describe("Reactivity: useState", () => {
     expect(fixture.innerHTML).toBe("<div><p><span>2b</span></p></div>");
   });
 });
+
+describe("derived", () => {
+  test("can read", async () => {
+    const state = reactive({ a: derived([], () => 1) });
+    expect(state.a).toBe(1);
+  });
+
+  test("can create new keys", () => {
+    const state: any = reactive({ b: derived([], () => 2) });
+    state.a = 1;
+    expect(state.a).toBe(1);
+  });
+
+  test("can update", () => {
+    const o = reactive({ a: 1 });
+    let computeCall = 0;
+    const state = reactive({
+      a: derived([o], (o) => {
+        computeCall++;
+        return o.a;
+      }),
+    });
+    expect(computeCall).toBe(1);
+    expect(state.a).toBe(1);
+    o.a = 2;
+    expect(computeCall).toBe(2);
+    expect(state.a).toBe(2);
+  });
+
+  test("callback is called when changing an observed property", async () => {
+    let notifyCount = 0;
+    const o = reactive({ a: 1 });
+    let computeCall = 0;
+    const state = reactive(
+      {
+        a: derived([o], (o) => {
+          computeCall++;
+          return o.a;
+        }),
+      },
+      () => notifyCount++
+    );
+    expect(computeCall).toBe(1);
+    expect(notifyCount).toBe(0);
+    expect(state.a).toBe(1);
+    o.a = 2;
+    expect(computeCall).toBe(2);
+    expect(notifyCount).toBe(1);
+    expect(state.a).toBe(2);
+    o.a = 5;
+    expect(computeCall).toBe(3);
+    expect(notifyCount).toBe(2);
+    expect(state.a).toBe(5);
+  });
+
+  test("multiple dependencies", async () => {
+    let notifyCount = 0;
+    const a = reactive({ val: 1 });
+    const b = reactive({ val: 2 });
+    let computeCall = 0;
+    const state = reactive(
+      {
+        c: derived([a, b], (a, b) => {
+          computeCall++;
+          return a.val + b.val;
+        }),
+      },
+      () => notifyCount++
+    );
+    expect(computeCall).toBe(1);
+    a.val = 2;
+    expect(computeCall).toBe(2);
+    expect(notifyCount).toBe(0);
+    expect(state.c).toBe(4);
+    a.val = 4;
+    expect(computeCall).toBe(3);
+    expect(notifyCount).toBe(1);
+    expect(state.c).toBe(6);
+    b.val = 3;
+    expect(computeCall).toBe(4);
+    expect(notifyCount).toBe(2);
+    expect(state.c).toBe(7);
+  });
+
+  test("dependency on own fields", async () => {
+    let notifyCount = 0;
+    const a = reactive({ val: 1 });
+    let computeCall = 0;
+    const state = reactive(
+      {
+        b: 2,
+        c: derived([a], function (this: any, a) {
+          computeCall++;
+          return a.val + this.b;
+        }),
+      },
+      () => notifyCount++
+    );
+    expect(computeCall).toBe(1);
+    a.val = 2;
+    expect(computeCall).toBe(2);
+    expect(notifyCount).toBe(0);
+    expect(state.c).toBe(4);
+    a.val = 4;
+    expect(computeCall).toBe(3);
+    expect(notifyCount).toBe(1);
+    expect(state.c).toBe(6);
+    state.b = 3;
+    expect(computeCall).toBe(4);
+    expect(notifyCount).toBe(2);
+    expect(state.c).toBe(7);
+  });
+
+  test("dependency on derived property", () => {
+    let computeB = 0;
+    let computeC = 0;
+    const state = reactive({
+      a: 1,
+      b: derived([], function (this: any) {
+        computeB++;
+        return this.a + 1;
+      }),
+      c: derived([], function (this: any) {
+        computeC++;
+        return this.b + 1;
+      }),
+    });
+    expect(computeB).toBe(1);
+    expect(computeC).toBe(1);
+    expect(state.c).toBe(3);
+  });
+
+  test("dependency on derived property appearing later in object", () => {
+    let computeB = 0;
+    let computeC = 0;
+    const state = reactive({
+      a: 1,
+      c: derived([], function (this: any) {
+        computeC++;
+        return this.b + 1;
+      }),
+      b: derived([], function (this: any) {
+        computeB++;
+        return this.a + 1;
+      }),
+    });
+    expect(computeB).toBe(1);
+    // because computation is eager and naive, C is first computed to be undefined, then B is computed
+    // to be 2, and the computation of B causes C to recompute and become 3. This causes C to compute twice.
+    expect(computeC).toBe(2);
+    expect(state.c).toBe(3);
+  });
+});