Add sublevel menu items
Creating sublevel menu items in both Joomla 1.0 and Joomla 1.5 is achieved by same general process. Think of Joomla's menu items as "parents" and "children". In order to create a sublevel item, you will need to assign a "parent" to that item. This is done inside the Menu Manager. Navigate to the menu manager and select the menu to be modified.
Joomla! 1.0: Menu > mainmenu
Joomla! 1.5: Menus > Main Menu
Select the menu item you would like to assign as a sublevel (or child) item.
You will see a dialog below titled "Parent Item"
Choose the item to assign as the parent and save.