One embodiment of the present invention sets forth a technique for scheduling thread execution in a multi-threaded processing environment. A two-level scheduler maintains a small set of active threads called strands to hide function unit pipeline latency and local memory access latency. The strands are a sub-set of a larger set of pending threads that is also maintained by the two-leveler scheduler. Pending threads are promoted to strands and strands are demoted to pending threads based on latency characteristics, such as whether outstanding load operations have been executed. The longer latency of the pending threads is hidden by selecting strands for execution. When the latency for a pending thread is expired, the pending thread may be promoted to a strand and begin (or resume) execution. When a strand encounters a latency event, the strand may be demoted to a pending thread while the latency is incurred.