Dernie was raised in Lancashire and attended Kirkham Grammar School before studying engineering at Imperial College London. During his studies he developed a computer program to optimise racing car suspension geometry — work he later acknowledged was novel without him realising it at the time. After graduating he joined David Brown Ltd as a junior engineer in its noise and vibration R&D department, where he designed his own transducers and carried out extensive measurement work. Through a contact at March who had begun using his suspension software, Dernie's work drifted increasingly toward motorsport. He subsequently moved to a noise and vibration role at Garrard before making the full transition to Formula One.
In 1976 Dernie joined the Hesketh F1 team at the age of 26, where he designed his first Formula One racing car, the Hesketh 308E. His performance attracted the attention of Frank Williams, who hired him to join Patrick Head at the newly expanding Williams Grand Prix Engineering operation. The pairing proved highly productive: Dernie contributed to the design of the Williams FW07 and FW08, cars that formed the backbone of Williams's championship-winning period in the early 1980s.
During his years at Williams, Dernie introduced several technologies that became standard across Formula One. Recognising the potential of computing, he wrote his own machine-code software to perform aerodynamic and suspension calculations — work for which commercial tools did not yet exist. He also championed the idea of an in-house wind tunnel at the Williams factory in Didcot, Oxfordshire. Together with Ross Brawn, he wired up the electronic systems for the tunnel, which had been acquired in sections from an outside firm; Williams became the first Formula One team to operate a dedicated on-site wind tunnel facility.
Dernie is also credited with developing active suspension for Formula One application. The system was introduced on a Williams car in 1987 and won on its debut at the Italian Grand Prix at Monza, with Nelson Piquet driving. Active suspension was subsequently banned by the FIA as part of measures to reduce the performance advantage enjoyed by better-resourced teams.
His use of data loggers — recording telemetry from the car during running — was another pioneering contribution. These tools gave engineers systematic access to on-track data for the first time, transforming the way teams diagnosed problems and developed setups.
For the 1989 season Dernie moved to Team Lotus, taking the role of Technical Director and replacing Gérard Ducarouge. The team, however, was losing major sponsorship and lacked the resources necessary for competitive car development. In 1991 Ross Brawn, his former colleague from Williams, encouraged Dernie to join Benetton, where he contributed to the development of the car and helped improve the race team's operational efficiency.
In early 1992 Dernie was present at Ligier during test sessions at which Alain Prost evaluated the car, observing that Prost was lapping approximately one and a half to two seconds faster than the team's regular driver, Thierry Boutsen. He subsequently joined Ligier formally for the 1995 season as Technical Director. He then moved to Arrows for 1996, staying for a single year.
Dernie left Formula One for the first time to join Lola Cars, where he helped the team re-establish itself in American Champ Car racing following MasterCard Lola's disastrous single-season Formula One attempt in 1997. In 2002 he departed Lola and returned to Williams as a consultant engineer from 2003. He left Williams in early 2007 and later that year joined the Toyota F1 team as a consultant on aerodynamic and chassis matters.
Dernie's contributions to Formula One engineering — active suspension, computer-aided design, on-board data logging, and on-site wind tunnel testing — each became fundamental tools of the modern sport. His work at Williams in particular helped establish the team as a technical leader during one of its most successful periods. His career also illustrates the close collaborative networks of the British motorsport industry: key figures such as Ross Brawn moved through overlapping roles at Williams, Benetton, and Ligier alongside Dernie at various stages of both men's careers.