This paper describes the results of a Distributed Mission Training (DMT) Operations and Integration (O&I) Research and Development (R&D) Task, DMT Multilevel Security (MLS) Feasibility Assessment, performed for the USAF. The focus of the study is the feasibility of employing MLS capabilities within a virtual training environment. MLS continues to be a significant challenge for military communications networks with unique issues arising in the modeling and simulation (M&S) context. The fundamental MLS issue in a simulation environment is how to construct a consistent, useful battlespace at each participating classification, while not revealing, through inference or direct disclosure, information for which participants are not cleared. The common battlespace consists of all observations and interactions possible among all participating Simulation Objects (e.g., Federates). Approaches that obscure aspects of the system that have observable effects impact the fidelity of the simulation event and may impact the training value of the event. Defining the common battlespace and obtaining agreement among the participating communities can then be difficult to accomplish. The achievement of M&S MLS solutions will require a clearly identified strategy defining security risk and identifying the policy and technology changes needed to move from isolated, system high, to distributed, MLS, training. Current MLS solutions only partially address the information sharing needs between simulated airframe, joint, and coalition communities. Based on technology and policy assessments, this paper provides a description of the core issues via scenarios for MLS in M&S and describes technical approaches using existing technology to solve these issues. This paper addresses policy considerations with an eye toward the potential changes needed for a fully functional MLS training system to be constructed.