We introduce an adaptive hybrid level set surface tracking for fluid simulation in this paper. To improve the accuracy of the convectional level set method, we propose a method that combines the higher accuracy interpolation and octree grid to improve the accuracy while still maintain good efficiency. Adaptive gradient-augmented level set is adopted for higher accuracy interpolation and two strategies are proposed to guide the building of the octree structure. We demonstrate our method with several level set tests, and couple it to several existing fluid simulators. The results show that our method facilitates significant improvements in accuracy and efficiency, and is effective for free surface fluid simulation in capturing fluid details.