This is what I do:
First, gather the ingredients. You need a half gallon of milk (organic, raw, or regular pasteurized), 1 1/2 cups of powdered milk, sweetener (I used honey and agave), vanilla extract (or some vanilla beans), and 3/4 cup of yogurt with live active cultures. Also, you need a 2 quart crockpot (I bought this one especially for yogurt making for $4.00 on black friday).
*** Edit*** I no longer use the powdered milk and the yogurt still turns out great!
Pour the half gallon of milk into the crock and set it on low for 2 hours and 45 mins.
Now turn the crockpot off and let the milk cool with the lid on for 3 hours. When 3 hours have passed, remove 2 cups of the warm milk to a bowl.
To the bowl/milk, add 3/4 cup of yogurt with live active cultures. Wisk well.
To the crock, add the rest of the ingredients ( if you want plain yogurt, just leave out the vanilla and sweetener) and mix well.
Pour the yogurt mix back into the crock and stir. Replace the lid and wrap the whole crock in a thick bath towel.
Let the yogurt sit in a warm place for 8-12 hours. In order to culture, the yogurt has to stay warm. Since my house stays pretty cold, I warmed my oven a little (too hot will kill the bacteria in the yogurt), then turned it off and placed the whole bundle in there.
After, it cultures, chill thoroughly before eating.
At this point you can add fruit if you like. I don't suggest putting the fruit in until it is completely finished. So easy! Try it!