We investigate the use of two-level nested grids as acceleration structure for ray tracing of dynamic scenes. We propose a massively parallel, sort-based construction algorithm and show that the two-level grid is one of the structures that is fastest to construct on modern graphics processors. The structure handles non-uniform primitive distributions more robustly than the uniform grid and its traversal performance is comparable to those of other high quality acceleration structures used for dynamic scenes. We propose a cost model to determine the grid resolution and improve SIMD utilization during ray-triangle intersection by employing a hybrid packetization strategy. The build times and ray traversal acceleration provide overall rendering performance superior to previous approaches for real time rendering of animated scenes on GPUs.