diff --git a/core-tests/shared/src/test/scala/zio/prelude/newtypes/DerivationSpec.scala b/core-tests/shared/src/test/scala/zio/prelude/newtypes/DerivationSpec.scala
new file mode 100644
index 000000000..94b0b4bb3
--- /dev/null
+++ b/core-tests/shared/src/test/scala/zio/prelude/newtypes/DerivationSpec.scala
@@ -0,0 +1,45 @@
+package zio.prelude.newtypes
+
+import zio.prelude.{Newtype, Subtype}
+import zio.test._
+import zio.prelude.newtypes.derivation.derive
+
+object DerivationSpec extends DefaultRunnableSpec {
+  trait Show[A]{
+    def show(a: A): String
+  }
+
+  implicit val showString: Show[String] = (a: String) => a
+
+  // these are imported from an external library - we have no control over them
+  object External{
+    object Secret extends Newtype[String]
+    type Secret = Secret.Type
+
+    object Password extends Subtype[String]
+    type Password = Password.Type
+  }
+
+  import External._
+
+  override def spec = suite("external derivation for newtypes")(
+    test("works for Newtype"){
+      val showSecret: Show[Secret] = derive
+      assertTrue(showSecret.show(Secret("foo")) == "foo")
+    },
+    test("works for Subtype"){
+      val showPassword: Show[Password] = derive
+      assertTrue(showPassword.show(Password("foo")) == "foo")
+    },
+    testM("works with auto derivation"){
+      typeCheck(
+        """
+          |import zio.prelude.newtypes.derivation.auto._
+          |implicitly[Show[Secret]]
+          |implicitly[Show[Password]]
+          |""".stripMargin)
+        .absolve
+        .as(assertCompletes)
+    }
+  )
+}
diff --git a/core/shared/src/main/scala/zio/prelude/newtypes/derivation.scala b/core/shared/src/main/scala/zio/prelude/newtypes/derivation.scala
new file mode 100644
index 000000000..10631bbcf
--- /dev/null
+++ b/core/shared/src/main/scala/zio/prelude/newtypes/derivation.scala
@@ -0,0 +1,14 @@
+package zio.prelude.newtypes
+
+import zio.prelude.Newtype
+
+object derivation {
+  def derive[A, STA <: Newtype[A], F[_]](implicit ev: STA <:< Newtype[A], typeClass: F[A]): F[STA#Type] =
+    typeClass.asInstanceOf[F[STA#Type]]
+
+  trait Auto {
+    implicit def auto[A, STA <: Newtype[A], F[_]](implicit ev: STA <:< Newtype[A], typeClass: F[A]): F[STA#Type] =
+      derive
+  }
+  object auto extends Auto
+}