The carrier will add services to Oakland, Punta Cana and Buenos Aires later this month.
Level's first flight took off Thursday afternoon for a 13-hour flight to Los Angeles with a 314-seater Airbus 330.
In launching Level, IAG is vying to compete with Norwegian Air and other growing transatlantic low-priced carriers. Two or three more aircraft will join Level's fleet to serve further destinations from summer 2018. The non-stop Level - operating as "Iberia for Level" for now - is listed at $200 on the site for most of its flights.
Willie Walsh, IAG's chief executive said: "This is the start of a fantastic new adventure for IAG". Some 134,000 tickets have sold since Level's unveiling on 17 March, says IAG.
British Airways owner IAG is already looking to expand its new budget airline Level across Europe as early as next year. The brand has resonated with a new audience, many of whom are flying long-haul for the first time.
Initially the airline will operate two A330-200s which will be operated by Iberia, with LEVEL's flights being flown under the Spanish flag carrier's IB code.
The airline also has a codeshare agreement with American Airlines on flights between Barcelona and the US.