Project 2007 Resource Leveling

During planning you must have faced problem of resources being over allocated. The leveling feature in Project uses techniques such as splitting tasks or adding delay so that your work, generic and committed resource allocations, and adjusts your project so that your resources are no longer over allocated. However, because tasks can be delayed or split through the use of leveling, doing so might affect your project's finish date. Make sure that before leveling you has set the task priorities between 1 to 1000. This priority value is used by Project to delay lower priority tasks.

To level resources click Tools --> Level Resources...
Here you have Automatic and Manual leveling options.