Certain monsters can used as the basis for interesting, viable player characters. These creatures have a level adjustment entry, which is a number that is added to the creature's total Hit Dice to arrive at its effective character level. A creature with multiple special abilities is more powerful as a player character than its Hit Dice alone would indicate. For example, a drow elf has spell resistance, bonuses to its ability scores, and spell-like abilities. Its level adjustment of +2 indicates that a 1st-level drow wizard is the equivalent of a 3rd-level character.

Some creatures' level adjustment entries include the word "(cohort)." Although these creatures may be problematic as PCs, they make good companions for a character who has taken the Leadership feat. Some other creatures aren't intended for use as PCs or cohorts but can become companions through the use of the Improved Familiar feat. In these cases, the level adjustment entry is a dash followed by the words "(Improved Familiar)."

Level adjustment is not the same thing as an adjustment to a creature's Challenge Rating because of some special qualities it possesses. Challenge Rating reflects how difficult an opponent is to fight in a limited number of encounters. Level adjustment shows how powerful a creature is as a player character or cohort in campaign play. For instance, a drow receives a +1 adjustment to its Challenge Rating to account for its special abilities, indicating that it's tougher in a fight than its Hit Dice would suggest, but its level adjustment is +2 to balance its abilities over long-term play.