This report documents the addition of ghost node Local Grid Refinement (LGR2) to MODFLOW-2005, the U.S. Geological Survey modular, transient, three-dimensional, finite-difference groundwater flow model. LGR2 provides the capability to simulate groundwater flow using multiple block- shaped higher-resolution local grids (a child model) within a coarser-grid parent model. LGR2 accomplishes this by iteratively coupling separate MODFLOW-2005 models such that heads and fluxes are balanced across the grid-refinement interface boundary. LGR2 can be used in two-and three- dimensional, steady-state and transient simulations and for simulations of confined and unconfined groundwater systems.