Conventionally, multilevel analysis of covariance (ML-ANCOVA) has been the recommended approach for analyzing treatment effects in quasi-experimental multilevel designs with treatment application at the cluster-level. In this paper, we introduce the generalized ML-ANCOVA with linear effect functions that identifies average and conditional treatment effects in the presence of treatment-covariate interactions. We show how the generalized ML-ANCOVA model can be estimated with multigroup multilevel structural equation models that offer considerable advantages compared to traditional ML-ANCOVA. The proposed model takes into account measurement (...) error in the covariates, sampling error in contextual covariates, treatment-covariate interactions, and stochastic predictors. We illustrate the implementation of ML-ANCOVA with an example from educational effectiveness research where we estimate average and conditional effects of early transition to secondary schooling on reading comprehension. (shrink)