Level　of　service　is　a　kind　of　quality　criterion,　which　is　used　to　describe　the　operating　conditions　in　traffic　flow　and　the　feelings　of　drivers＇　and　passengers.　According　to　the　empirical　method,　percent　time　spent　following　and　average　travel　speed　are　regarded　as　the　grade　indicators　to　level　of　service　for　two-lane　highways,　although　this　approach　lacks　the　powerful　data　explanation.　It　is　discovered　that　the　overtaking　ratio　can　reflect　the　driver＇s　freedom　and　the　interference　conditions　among　vehicles　in　traffic　flow.　By　simulation　approach,　this　article　plotted　relation　curve　between　the　V/C　and　overtaking　ratio,　then　divided　level　of　service　of　two-lane　highways　into　four　grades　according　to　the　characters　of　overtaking　behaviors,　and　determined　the　numeric　area　for　percent　time　spent　following　and　average　travel　speed　of　each　grade,　which　would　provide　reference　for　revision　of　highway　capacity　manual　and　engineering　practices.