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Let's suppose my character dies and I roll a new one or raise dead is cast on him. The rules say I lose a level by doing so.

Now, in my group we had lots of discussions on how it's done. We used to start at the beginning of the previous level. Even if we chose halfway from one level to the next, that was dissatisfying for there were moments where death was cheaper (right after leveling up). We tried losing XP equal to 1000 times the preious level (the same amount that was needed to level up) and sure, there were spikes (to die in the last 1000 xp of a level was better than to die when you just leveled up) but they were minor and we used that system quite a lot.

What's the One True Way according to RAW?

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DMG says:

The victim’s experience point total is immediately set to the midpoint of the previous level.

Now, that is the One True Way. However, you said you didn't like this system, I see no reason to adhere to it if you didn't like it.

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  • \$\begingroup\$ Houserules also are what makes awful games passable, if you know what I mean. accepted for getting straight to the point and being first, mxyzplk's answer was great too. \$\endgroup\$ – Zachiel Jun 4 '13 at 9:04
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It is spelled out explicitly and obviously in the level loss special ability.

A character who loses a level instantly loses one Hit Die. The character’s base attack bonus, base saving throw bonuses, and special class abilities are now reduced to the new, lower level. Likewise, the character loses any ability score gain, skill ranks, and any feat associated with the level (if applicable). If the exact ability score or skill ranks increased from a level now lost is unknown (or the player has forgotten), lose 1 point from the highest ability score or ranks from the highest-ranked skills. If a familiar or companion creature has abilities tied to a character who has lost a level, the creature’s abilities are adjusted to fit the character’s new level.

The victim’s experience point total is immediately set to the midpoint of the previous level.

-SRD, emphasis mine

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  • 1
    \$\begingroup\$ Shoot, 12 seconds :D \$\endgroup\$ – kravaros Jun 3 '13 at 13:22
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    \$\begingroup\$ I didn't know Level Loss was a special ability... O.o \$\endgroup\$ – Zachiel Jun 3 '13 at 14:05
  • \$\begingroup\$ I reckon they thought having a separate section for "special other things not quite abilities" was overthinking it. \$\endgroup\$ – mxyzplk - SE stop being evil Jun 3 '13 at 16:46

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