It's basically up to the GM. If you are the GM it's up to you.
My group has a house rule that you don't gain your level until you rest, specifically to head off those kinds of issues. But there's no hard and fast rule for it, so, as MrCharisma said, it's up to your GM/you.
My group does the same, only we allow gaining any and all non-magical and non-feat related level up benefits, like BAB, skills, saves, and HP.
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Mine is similar to Dark Midian. You get it all immediately, but if you need new spell slots filled in (or if you've gained new spontaneous spell slots) they aren't available until you rest or have some other fancy way of making use of them (like, I'd let a 5th level wizard use her bonded item to spontaneously cast a new 3rd level spell even though she hasn't had a chance to prepare them yet).
However, I don't level up my players mid-encounter ("encounter" could mean something as much as dungeon at this point). If they go from one floor to another, then sure, they can level up, but they're not going to level up between Room A and Room B unless they take a huge break between those two rooms.
My group has a house rule that you don't gain your level until you rest, specifically to head off those kinds of issues. But there's no hard and fast rule for it, so, as MrCharisma said, it's up to your GM/you.
I do the opposite. If combat in an encounter becomes split between two gaming sessions, and the party earned enough XP in the first half of combat to level up, then they level up in the middle of combat.
I even told the magus that he could prepare his extra spells while leveling up and cast them that combat.
I view it as the stress of combat bringing out extraordinary effort by the PCs. Or as retroactive continuity: they really leveled up that morning, but didn't quite have the hang of their new abilities until just that moment.
Looks like every GM has their own take on this. I only level up between sessions, but if that happens mid combat you level up mid combat, but you don't get access to new spell slots until you have rested.
I only allow a levelling after a rest.
I play that if you're a spontaneous caster you'd get access to the new spells/slots right away. The magic has awoken within you, you don't need a nap to use it.
If you're a prepared caster you get access to the slots but you'd still have to spend the normal amounts of time to write the new spells in your book and/or prepare the spells.
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According to the PRD, not sure where this'd be in the CRB..
http://paizo.com/pathfinderRPG/prd/coreRulebook/classes.html#character-adva ncement
Advancing Your Character
A character advances in level as soon as he earns enough experience points to do so—typically, this occurs at the end of a game session, when your GM hands out that session’s experience point awards.
I tend to play in groups where it just happens at the end of the session, since that's when we total up the xp. And that way the middle of your game doesn't get bogged down by someone picking their spells. On rare occasion, the DM will say to come with a leveled sheet, because there will be an early level up in the session.
My group handles it like Dark Midian's. You get new Max HP (and increase current HP total by increase to Max HP), BAB, Saves, CL, etc.
New spells slots are "gained" but they are empty until you are able to fill them via the normal methods for replenishing spells.
If you had a magic item that only worked if you "can cast Xth level spells" and X was your newly available spell level, we would probably rule that you could use the item.
We do the same. For the investigator/alchemist, since it only takes 1 minute to prepare an extract, this works out particularly favorable for them.
Since I'm apparently the only person who's commented on this thread without stating my preference, here's mine:
I prefer to play without XP, and just let the GM tell everyone when to level up. Typically you'd level between adventures (or at a really important plot point where the GM wants you to have new powers).
What bout PFS though?
We generally level between game sessions, but we have special rules to handle that if it occurs while we are still "in the field", i.e. a session ends in the middle of an adventure or even an encounter.
- You get access to the basic stat increases (HP, BAB, saves) and class features (that don't involve choices) right away. Existing skills can get skill point increases.
- If you pre-declared your leveling intentions to the GM, then you immediately get new feats and skills, and class features that required you to choose an option, under the assumption that you've been practicing those things during your downtime since the moment you declared your intentions. Otherwise, you have to wait until the current adventure has ended.
- Spellcasters get new spell slots immediately, but don't get to fill them with new spell levels until they have a full night's rest (e.g., if you level to a 9th level Wizard, you get your 5th level slots, but can only fill them with 4th level and lower spells). Casters that prepare spells must spend the 15 minutes (or whatever fraction it comes out to) to fill the new slots.
On very rare occasions, our GM will allow someone to level in mid-adventure. That only happens if they were very close to leveling after the previous session but didn't quite make it. This is an exception rather than a rule, and we have to ask for it.
The writeup makes it sound more complicated than it is. It basically boils down to, if you plan ahead and let the GM know what your plan is, you get it in the field.