what you need:
a computer
a laser printer (more specifically, something printed on a laser printer ;) copyshop will also work!) EDIT: It recall it working with newspaper/some magazines, too!!
paint thinner (EDIT: as some people have pointed out, the proper stuff to use would be lacquer thinner — mine contains xylene and benzine, just so you can re-check an see if the problems might have to do with the chemicals you use)
q-tips
a solid, flat, smooth thingy (letter opener or so...)
a surface to transfer the motif onto (fabric, paper, cardboard, wood, metal,... it works with a lot of stuff)
First, prepare your picture (size, resultion etc is pretty much irrelevant, this technique also transfers fine details!) with a graphics program so it is b/w or grayscale. There have been rumors it works with color, too, as long as it's laser printed, but I myself only work monochrome. Then — and I can't stress enough how important this is, even more so with actual lettering in the design — FLIP it horizontally. It should be mirrored, because we will put it on the surface with the printed side down!