This article examines the effects of clustering in latent class analysis. A comprehensive simulation study is conducted, which begins by specifying a true multilevel latent class model with varying within- and between-cluster sample sizes, varying latent class proportions, and varying intraclass correlations. These models are then estimated under the assumption of a single-level latent class model. The outcomes of interest are measures of bias in the Bayesian Information Criterion (BIC) and the entropy R[superscript 2] statistic relative to accounting for the multilevel structure of the data. The results indicate that the size of the intraclass correlation as well as between- and within-cluster sizes are the most prominent factors in determining the amount of bias in these outcome measures, with increasing intraclass correlations combined with small between-cluster sizes resulting in increased bias. Bias is particularly noticeable in the BIC. In addition, there is evidence that class separation interacts with the size of the intraclass correlations and cluster sizes in producing bias in these measures. (Contains 6 tables and 2 footnotes.)