Substructuring methods are often used in finite element structural analyses. In this study a multi-level substructuring(MLSS) algorithm is developed and proposed as a possible candidate for finite element fluid solvers. The present algorithm consists of four stages such as a gathering, a condensing, a solving and a scattering stage. At each level, a predetermined number of elements are gathered and condensed to form an element of higher level. At the highest level, each sub-domain consists of only one super-element. Thus, the inversion process of a stiffness matrix associated with internal degrees of freedom of each sub-domain has been replaced by a sequential static condensation of gathered element matrices. The global algebraic system arising from the assembly of each sub-domain matrices is solved using a well-known iterative solver such as the conjugare gradient(CG) or the conjugate gradient squared(CGS) method. A time comparison with CG has been performed on a 2-D Poisson problem. With one domain the computing time by MLSS is comparable with that by CG up to about 260,000 d.o.f. For 263,169 d.o.f using 8 x 8 sub-domains, the time by MLSS is reduced to a value less than $30\%$ of that by CG. The lid-driven cavity problem has been solved for Re = 3200 using the element interpolation degree(Deg.) up to cubic. in this case, preconditioning techniques usually accompanied by iterative solvers are not needed. Finite element formulation for the incompressible flow has been stabilized by a modified residual procedure proposed by Ilinca et al.[9].