Start with....a T-shirt (you saw that coming, right?). Any T-shirt will do, from toddler size to men's XXXL. Obviously, you will get more yarn out of the latter.
Cut 1 inch wide strips from the bottom to the top, leaving the strips attached by a couple of inches at the top. Exact measurements are not necessary.
That's a lot of strips to cut by hand so a faster method is to use a rotary cutter. Either way works but the rotary cutter is faster and easier on your hands (if you're prone to arthritis or other hand stiffness).
And here is my completely cut tube. Not to worry about the ragged edges of the hand cut strips on the right--all of that will disappear.
Now, unfold the uncut edge and spread out the strips top and bottom. Hold on to your hats--here comes the magic part!
Now jump up one strip and make a cut parallel to your initial one, hopping up to the next strip each time as you go. So instead of cutting individual T-shirt rings, you are making one glorious spiral! Don't worry if that part looks uneven or more slanted than the rest of the strip, it will all even out. Keep on doing this to all of the strips until you get to the last one.
Here is the end of the line! Make the last cut on a slant to the outer edge and you are done with this stage.
If you want perfectly smooth yarn, stop here--many folks do. Personally, I feel like there is still a lot of T-shirt left to harvest so I continue on with the sleeves and the neck and attach those to main segment created here. I'll show you how to attach the 3 additional pieces without any messy and lumpy knots, too.
I'm having trouble posting additional pictures so I'll finish the process in another post tomorrow. Stay tuned!