diff --git a/core/src/main/java/org/bitcoinj/crypto/DeterministicKey.java b/core/src/main/java/org/bitcoinj/crypto/DeterministicKey.java
index c26eba7a..e4855d55 100644
--- a/core/src/main/java/org/bitcoinj/crypto/DeterministicKey.java
+++ b/core/src/main/java/org/bitcoinj/crypto/DeterministicKey.java
@@ -276,6 +276,20 @@ public class DeterministicKey extends ECKey {
         return key;
     }
 
+    /**
+     * A deterministic key is considered to be 'public key only' if it hasn't got a private key part and it cannot be
+     * rederived.
+     */
+    @Override
+    public boolean isPubKeyOnly() {
+        if (!super.isPubKeyOnly())
+            return false;
+        if (parent != null)
+            return parent.isPubKeyOnly();
+        else
+            return true;
+    }
+
     /**
      * A deterministic key is considered to be encrypted if it has access to encrypted private key bytes, OR if its
      * parent does. The reason is because the parent would be encrypted under the same key and this key knows how to
diff --git a/core/src/main/java/org/bitcoinj/crypto/HDKeyDerivation.java b/core/src/main/java/org/bitcoinj/crypto/HDKeyDerivation.java
index 6bd37f9a..ab0c4f66 100644
--- a/core/src/main/java/org/bitcoinj/crypto/HDKeyDerivation.java
+++ b/core/src/main/java/org/bitcoinj/crypto/HDKeyDerivation.java
@@ -133,7 +133,7 @@ public final class HDKeyDerivation {
      * if the resulting derived key is invalid (eg. private key == 0).
      */
     public static DeterministicKey deriveChildKey(DeterministicKey parent, ChildNumber childNumber) throws HDDerivationException {
-        if (parent.isPubKeyOnly()) {
+        if (!parent.hasPrivKey()) {
             RawKeyBytes rawKey = deriveChildKeyBytesFromPublic(parent, childNumber, PublicDeriveMode.NORMAL);
             return new DeterministicKey(
                     HDUtils.append(parent.getPath(), childNumber),
diff --git a/core/src/test/java/org/bitcoinj/crypto/ChildKeyDerivationTest.java b/core/src/test/java/org/bitcoinj/crypto/ChildKeyDerivationTest.java
index 1a684dbb..c503e47b 100644
--- a/core/src/test/java/org/bitcoinj/crypto/ChildKeyDerivationTest.java
+++ b/core/src/test/java/org/bitcoinj/crypto/ChildKeyDerivationTest.java
@@ -171,9 +171,15 @@ public class ChildKeyDerivationTest {
     @Test
     public void pubOnlyDerivation() throws Exception {
         DeterministicKey key1 = HDKeyDerivation.createMasterPrivateKey("satoshi lives!".getBytes());
+        assertFalse(key1.isPubKeyOnly());
         DeterministicKey key2 = HDKeyDerivation.deriveChildKey(key1, ChildNumber.ZERO_HARDENED);
+        assertFalse(key2.isPubKeyOnly());
         DeterministicKey key3 = HDKeyDerivation.deriveChildKey(key2, ChildNumber.ZERO);
-        DeterministicKey pubkey3 = HDKeyDerivation.deriveChildKey(key2.getPubOnly(), ChildNumber.ZERO);
+        assertFalse(key3.isPubKeyOnly());
+        DeterministicKey pubkey2 = key2.getPubOnly();
+        assertTrue(pubkey2.isPubKeyOnly());
+        DeterministicKey pubkey3 = HDKeyDerivation.deriveChildKey(pubkey2, ChildNumber.ZERO);
+        assertTrue(pubkey3.isPubKeyOnly());
         assertEquals(key3.getPubKeyPoint(), pubkey3.getPubKeyPoint());
     }
 
diff --git a/core/src/test/java/org/bitcoinj/wallet/BasicKeyChainTest.java b/core/src/test/java/org/bitcoinj/wallet/BasicKeyChainTest.java
index 0ef2a734..13d03d85 100644
--- a/core/src/test/java/org/bitcoinj/wallet/BasicKeyChainTest.java
+++ b/core/src/test/java/org/bitcoinj/wallet/BasicKeyChainTest.java
@@ -147,6 +147,7 @@ public class BasicKeyChainTest {
         assertFalse(chain.checkPassword("wrong"));
         ECKey key = chain.findKeyFromPubKey(key1.getPubKey());
         assertTrue(key.isEncrypted());
+        assertTrue(key.isPubKeyOnly());
         assertNull(key.getSecretBytes());
 
         try {
@@ -163,6 +164,7 @@ public class BasicKeyChainTest {
         chain = chain.toDecrypted(PASSWORD);
         key = chain.findKeyFromPubKey(key1.getPubKey());
         assertFalse(key.isEncrypted());
+        assertFalse(key.isPubKeyOnly());
         key.getPrivKeyBytes();
     }
 
diff --git a/core/src/test/java/org/bitcoinj/wallet/DeterministicKeyChainTest.java b/core/src/test/java/org/bitcoinj/wallet/DeterministicKeyChainTest.java
index a33df287..a2e58166 100644
--- a/core/src/test/java/org/bitcoinj/wallet/DeterministicKeyChainTest.java
+++ b/core/src/test/java/org/bitcoinj/wallet/DeterministicKeyChainTest.java
@@ -54,7 +54,9 @@ public class DeterministicKeyChainTest {
     @Test
     public void derive() throws Exception {
         ECKey key1 = chain.getKey(KeyChain.KeyPurpose.RECEIVE_FUNDS);
+        assertFalse(key1.isPubKeyOnly());
         ECKey key2 = chain.getKey(KeyChain.KeyPurpose.RECEIVE_FUNDS);
+        assertFalse(key2.isPubKeyOnly());
 
         final Address address = new Address(UnitTestParams.get(), "n1bQNoEx8uhmCzzA5JPG6sFdtsUQhwiQJV");
         assertEquals(address, key1.toAddress(UnitTestParams.get()));
@@ -63,10 +65,13 @@ public class DeterministicKeyChainTest {
         assertEquals(key2, chain.findKeyFromPubKey(key2.getPubKey()));
 
         key1.sign(Sha256Hash.ZERO_HASH);
+        assertFalse(key1.isPubKeyOnly());
 
         ECKey key3 = chain.getKey(KeyChain.KeyPurpose.CHANGE);
+        assertFalse(key3.isPubKeyOnly());
         assertEquals("mqumHgVDqNzuXNrszBmi7A2UpmwaPMx4HQ", key3.toAddress(UnitTestParams.get()).toString());
         key3.sign(Sha256Hash.ZERO_HASH);
+        assertFalse(key3.isPubKeyOnly());
     }
 
     @Test