<PAGE>
 
                                                                    EXHIBIT 11.1

                            MCLEODUSA INCORPORATED
          COMPUTATION OF LOSS PER COMMON AND COMMON EQUIVALENT SHARE
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED     NINE MONTHS ENDED
                                              SEPTEMBER 30,         SEPTEMBER 30,
                                          ---------------------  ---------------------
                                             1997       1996        1997        1996
                                          ----------  ---------  ----------  ----------
<S>                                       <C>         <C>        <C>         <C>   
Computation of weighted average number
 of
     common shares outstanding and
      common
     equivalent shares: (A)
Common shares, Class A, outstanding at
 the                                         52,628     16,410      36,173              16,387
     beginning of the period
Common shares, Class B, outstanding at
 the                                            ---     15,626      15,626              15,626
     beginning of the period (B)
Weighted average number of shares issued
     during the period (C)                      707     14,197         953               5,806
Common equivalent shares attributable
 to stock                                       ---        ---         ---               3,346
     options granted (D)
Common stock issued (C)                         ---        ---         ---                  23
                                           --------    -------    --------            --------
Weighted average number of common shares
     and common equivalent shares            53,335     46,233      52,752              41,188
                                           ========    =======    ========            ========
Net loss                                   $(23,705)   $(4,535)   $(53,556)           $(13,418)
                                           ========    =======    ========            ========
Loss per common and common equivalent      $  (0.45)    $(0.10)     $(1.02)             $(0.33)
 share                                     ========    =======    ========            ========
</TABLE>

(A) All shares have been adjusted to give effect to the 3.75 for 1 stock split
    effected in the form of a stock dividend effective March 28, 1996.

(B) The Class B common stock, $.01 par value per share is convertible on a one-
    for-one basis at any time at the option of the holder into Class A common
    stock.  As of September 30, 1997, all shares of Class B common stock had
    been converted into shares of Class A common stock.

(C) All stock issued during the three months ended March 31, 1996 was within the
    twelve-month period discussed in (D) below.  As a result, the shares issued
    at prices below the assumed initial public offering price during this period
    have been included in the calculation as if they were outstanding for the
    entire period.

(D) All stock options are anti-dilutive, however, pursuant to Securities and
    Exchange Commission Staff Accounting Bulletin No. 83 (SAB 83), stock options
    granted with exercise prices below the assumed initial offering price during
    the twelve-month period preceding the date of the initial filing of the
    Registration Statement filed in connection with the Company's initial public
    offering have been included in the calculation of common stock equivalent
    shares as if they were outstanding for all periods through June 30, 1996,
    the quarter in which the initial public offering was declared effective.