A multilevel finite element approach is applied to predict local cell deformations in engineered tissue constructs. Cell deformations are predicted from detailed nonlinear FE analysis of the microstructure, consisting of an arrangement of cells embedded in matrix material. Effective macroscopic tissue behavior is derived by a computational homogenization procedure. To illustrate this approach, we simulated the compression of a skeletal muscle tissue construct and studied the influence of microstructural heterogeneity on local cell deformations. Results show that heterogeneity has a profound impact on local cell deformations, which highly exceed macroscopic deformations. Moreover, microstructural heterogeneity and the presence of neighboring cells leads to complex cell shapes and causes non-uniform deformations within a cell.