1 container of good vanilla or plain yogurt (about a cup) (don't go cheap on the yogurt brand)
whole milk (I usually only make about a quart at a time, just because that's what I'll eat, but I think the cup of yogurt would serve at least a half gallon's worth of milk ratio.)
Heat the milk to 120 degrees.
I like to use a thick bottomed pot so that I'm less likely to burn the milk. I also have found that using a thermometer is helpful.
When the milk is at 120 degrees add the yogurt. I also throw some sugar in (about a quarter cup but you can add in more or less if you like) to add some sweet flavor to the product. Make sure the yogurt is mixed in really well with the milk. A lack of proper mixing was my problem the first couple of times.
Then pour the milk/yogurt/sugar mixture into containers. I use Tupperware or canning jars. I also like to pour some into one pint canning jar. This way my starter is ready for the next run and it doesn't have crumbs in it or anything.
After lids are on your containers keep the mixture warm for 3-4 hours. What I have done is to fill a lunch bag part way with 120 degree water and then stick the containers in there.
After 3-4 hours in the warm lunch bag, throw the containers into the fridge over night. Your yogurt should be ready to go in the morning. It should look thick on the top of the container. This will stay for a week or so I assume. You should never have to buy yogurt again because you will just keep using that pre made version in the reserved pint container.