In creating new lexical items to accommodate new concepts, modern Arabic uses methods of word-formation (e.g., root-based derivation, compounding and borrowing). Another emerging type of word-formation is suffixational derivation, i.e. the productive use of suffixes such as -iyya and -yaat in forming new words from existing forms. This type of derivation has resulted in the creation of hundreds of words. This paper investigates the morpho-semantic nature of the ending -iyya, types of lexical items it creates and their role in translating foreign words and modernizing vocabulary. The study is based on a lexico-semantic survey of the lexical items listed in three modern Arabic dictionaries. The study findings indicate that -iyya has developed into a derivational suffix and has been increasingly productive in forming at least sixteen types of concrete and abstract nouns. The study also shows that -iyya is used in translating and adapting foreign words to accommodate new concepts.