Moderated multiple regression (MMR) provides a useful framework for understanding moderator variables. When the relationship between an independent variable (predictor) and a dependent variable (criterion) varies as a function of a third variable, that third variable is considered a moderator of the predictor-criterion relationship. Moderated relationships can also be examined within datasets that include nesting, for example individuals might be nested within groups. However, the literature is not clear on the best way to assess data for significant moderating effects, particularly within a multilevel modeling framework. This study explores potential ways to test moderation at the individual level (level 1) within a 2-level multilevel modeling framework, with varying effect sizes, cluster sizes, and numbers of clusters that represent realistic conditions in applied educational research. The study examines five potential methods for testing interaction effects: the Wald test, F-test, likelihood ratio test, BIC, and AIC.For each method, the simulation study examines how Type I error rates vary as a function of number of clusters and cluster size and how power varies as a function of number of clusters, cluster size, and interaction effect size. Following the simulation study, an applied study uses real data to assess interaction effects using the same five methods. Results indicate that the Wald test, F-test, and likelihood ratio test all perform similarly in terms of Type I error rates and power. Type I error rates for the AIC are more liberal, and for the BIC typically more conservative. A four-step procedure for applied researchers interested in examining interaction effects in multi-level models is provided. gender is present. Further, the data for this study (Litzler et al., 2014) included students nested within multiple schools, indicating that a multilevel model would be appropriate, given the non-independence of individual student observations. Moderator hypotheses such as these can be examined with moderated multiple regression models and this can be done within a multilevel framework for data that includes nesting. The results of these types of models can represent important and relevant contributions to the literature. This study will investigate methods for testing multilevel moderated regression models with interaction effects at the individual level only (or more generally, at level-one only). Within this study, this model includes a continuous dependent variable, a continuous independent variable, and a binary moderator variable. Methods for testing this interaction effect will be evaluated on Type I error rates and power based on a simulation study and an applied study will follow to illustrate the technique. An introduction to moderation, multilevel models, and testing for interaction effects follows in this chapter.