Domains can operate at various functional levels: Windows 2000 mixed, Windows 2000 native, and Windows Server 2003 (which only includes domain controllers running Windows Server 2003), Windows Server 2008, and Windows Server 2008 R2.
Once all domain controllers are running a newer version of Windows Server, you can raise the Domain and Forest Functionality to Windows Server by opening Active Directory Domains and Trusts, right clicking the domain for which you want to raise functionality, and then clicking Raise Domain Functional Level.
Note that once you raise the domain functional level, domain controllers running earlier operating systems cannot be introduced into the domain. For example, if you raise the domain functional level to Windows Server 2003, domain controllers running Windows 2000 Server cannot be added to that domain. However such servers can be members of the domain.
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