We present a method that has been developed for the efficient numerical simulation of two-phase incompressible flows. For capturing the interface between the phases the level set technique is applied. The continuous model consists of the incompressible Navier–Stokes equations coupled with an advection equation for the level set function. The effect of surface tension is modeled by a localized force term at the interface (so-called continuum surface force approach). For spatial discretization of velocity, pressure and the level set function conforming finite elements on a hierarchy of nested tetrahedral grids are used. In the finite element setting we can apply a special technique to the localized force term, which is based on a partial integration rule for the Laplace–Beltrami operator. Due to this approach the second order derivatives coming from the curvature can be eliminated. For the time discretization we apply a variant of the fractional step θ-scheme. The discrete saddle point problems that occur in each time step are solved using an inexact Uzawa method combined with multigrid techniques. For reparametrization of the level set function a new variant of the fast marching method is introduced. A special feature of the solver is that it combines the level set method with finite element discretization, Laplace–Beltrami partial integration, multilevel local refinement and multigrid solution techniques. All these components of the solver are described. Results of numerical experiments are presented.