This article presents and studies a two-level grad-div stabilized finite element discretization method for solving numerically the steady incompressible Navier–Stokes equations. The method consists of two steps. In the first step, we compute a rough solution by solving a nonlinear Navier–Stokes system on a coarse grid. And then, in the second step, we pass the coarse grid solution to a fine grid to linearize the nonlinear term, update the solution by solving a linearized problem based on Newton iterations. In both steps, a grad-div stabilization term is incorporated into the system to reduce the influence of pressure on the approximate velocity. We analyze stability and asymptotic convergence of the approximate solutions, derive explicit dependence of the solution errors on the grad-div stabilization parameter and viscosity. We perform also some numerical tests to validate the theoretical analysis and illustrate the efficiency of the proposed method. Compared with the standard two-level method without stabilizations, the grad-div stabilization term added in present method improves the accuracy of the approximate velocity, accelerates the convergence of the nonlinear iterations for the coarse mesh nonlinear system, and reduces the computational time. •A two-level grad-div stabilized finite element discretization method for the incompressible Navier–Stokes equations is presented.•The method is easy to implement based on existing codes.•The method can yield much better solutions than the standard two-level discretization method with reduction in computational time when the viscosity is small.•Convergence results with respective to the mesh size, viscosity and stabilization parameter are derived.•Numerical results demonstrate the promise of the proposed method.