The standard local defect correction (LDC) method has been extended to include multilevel adaptive gridding, domain decomposition, and regridding. The domain decomposition algorithm provides a natural route for parallelization by employing many small tensor-product grids, rather than a single large unstructured grid; this algorithm can greatly reduce memory usage. The above properties are illustrated by successfully applying the new algorithm to a simple heat transfer problem with an analytical solution, and by subsequently solving the more complex problem of an axisymmetric laminar Bunsen flame with one-step chemistry. The simulation data show excellent agreement with results previously published in the literature.