Goals from Niall Toner and Niall Loughlin helped Derry beat Down 2-12 to 1-11 in Wednesday night's Ulster Under-21 Football preliminary-round tie.
Toner's goal helped Derry move 1-3 to 0-0 ahead but a Pat Havern strike saw Down cutting the margin to 1-6 to 1-5.
Derry hit four unanswered points to move five up and Loughlin's goal left them 2-10 to 1-7 ahead at Celtic Park.
Down cut Derry's lead in the closing stages but the home side held on to set up a quarter-final against Monaghan.
Loughlin top-scored for Derry with 1-4 while the impressive Terence O'Brien scored three points for the winners.
O'Brien opened the scoring for Derry and after further Loughlin and Neil McNicholl points, Toner's goal moved the home side into a 1-3 to 0-0 lead.
Rory Mason then opened Down's account with two points and while Loughlin and Patrick McElroy responded for Derry, Havern's goal helped the visitors move to within a point of the home side.
However, two O'Brien points extended Derry's lead to 1-8 to 1-5 at half-time and further Loughlin and James Kearney scores extended the advantage to five.
A Havern scored helped Down cut the margin to three but Loughlin's 43rd-minute goal then enabled his side to take a 2-11 to 1-7 advantage.
Down hit four of the last five scores - with Mason finishing on five points - but Derry never really looked like being caught.
New Oak Leaf boss Paul McIver was without Slaughtneil trio Gerard Bradley, Brendan Rodgers and Cormac O'Doherty while the home side were also missing a number of Glen clubmen who won the recent Under-21 club title.
Ten of Brian McIver's senior squad are however available for the campaign.
The Ulster Under-21 championship will be played to a finish inside a month, with the four quarter-finals taking place next Wednesday.
Holders, Cavan, who face rivals Donegal in Ballybofey, are going for five in a row at Under-21 level.
Ulster Under-21 Football Championship 2015 fixtures - All 20:00 GMT or BST throw-ins
Wednesday 18 March - Quarter-finals - Tyrone v Fermanagh (Healy Park); Armagh v Antrim (Athletic Grounds); Donegal v Cavan (Ballybofey); Monaghan v Derry (Inniskeen)
Wednesday 1 April - Semi-finals - Tyrone/Fermanagh v Armagh/Antrim; Donegal/Cavan v Monaghan/Derry/Down
Wednesday 8 April - Final