Jamie Crawford and Mark McAteer scored the goals as Donegal made it three wins from three games in the Ulster U-17 McGuigan Cup.
Crawford scored two of the goals, one in each half, while McAteer hit his in the first half. Donegal completely overwhelmed the visitors in the opening 30 minutes and led 2-8 to 0-0 at half-time.
Derry did come more into the game in the second period and after Crawford scored Donegal the third goal, but it came as Francie Friel ran the bench, and the result was never in doubt.
The win means that Donegal have qualified for the semi-final of the McGuigan Cup with a game to go.
They play Antrim next Saturday in O’Donnell Park.
Donegal: Eoin O’Boyle; Shane McColgan, James Kelly,Ciaran Doherty, Ian Campbell (0-1),Conor O’Donnell, Odhran Doogan (0-1); Jamie Crawford (2-2), Peter McEniff (0-1); Cian Doherty, Keelan McMonagle, Mark McAteer (1-3,1f) Danny Gallagher (0-1), Conor O’Donnell (0-1), Ben Bradley.
Subs used: Michael Statham, Oisin Bonner (0-1,f), Matthew McKenna, Shane McDaid, Daniel Gallagher, Ross Marley.