This paper describes a hierarchical stochastic simulation algorithm which has been implemented within iBioSim, a tool used to model, analyze, and visualize genetic circuits. Many biological analysis tools flatten out hierarchy before simulation, but there are many disadvantages associated with this approach. First, the memory required to represent the model can quickly expand in the process. Second, the flattening process is computationally expensive. Finally, when modeling a dynamic cellular population within iBioSim, inlining the hierarchy of the model is inefficient since models must grow dynamically over time. This paper discusses a new approach to handle hierarchy on the fly to make the tool faster and more memory-efficient. This approach yields significant performance improvements as compared to the former flat analysis method.