Materials needed: a t-shirt, yucky/cheap paint brushes, an embroidery hoop, screen printing ink (I use Speedball brand), a glue that isn't water-soluble (I use Mod Podge), curtain sheer material/tulle/old nylons, and a computer with a printer (or a good hand for drawing things).
Find an image you like and that has good contrast. My cow needed to be "cut out," and I've only got Microsoft Paint on this computer and it worked fine.
Save the image as a Monochrome Bitmap file and it will turn it black and white. If this loses all the detail, fudge around on Paint or try a different picture, haha.
Print it out so the image is the size you want it on the t-shirt (and also so it's not bigger than the embroidery hoop you spent ¢67 on).
After pulling the sheer curtain material/tulle/old nylons tight across the embroidery hoop (and screwing it shut real good), trace the image onto the material with a pencil with the material close to the paper, not upside down so it's far away.
You should be able to see the pencil outline easily without squinting too hard. If it's too detailed, fudge some more.
Turn the thing over and with the glue, paint all the "negative space," (all the places you don't want ink to go, the white space). Make sure the material isn't touching whatever surface you're working on otherwise you'll end up gluing the whole thing down, obviously.
Some people say you can use tape to fill in the bigger area, but I think that painting the glue on all over the larger spaces is the best part, but do what you will.
After the glue dries, center the image on the shirt face down, and I sort of stipple the ink through the material making sure it's fully saturated, but also making sure not to glob it all over the place.
Carefully peel it back, wait for it to dry, and follow the "setting" directions on the ink (mine is to iron it on medium 3 - 5 minutes each side with a piece of cloth/paper between the iron and the ink).
(Originally posted here: http://community.livejournal.com/craftgrrl/3674467.html)