I found this awesome DIY on the Make it and Love it Blog.
It's one of the easiest and most useful projects I have made. :)
Cut five strips from the T-shirt. I made them about a half an inch wide. Maybe a bit less. Sew a piece of hem around the strips to secure them. Then tuck the hemmed side under something heavy so you can start braiding.
If you visit Ashley's post, she has a photo tutorial set up.
Basically you are going to braid the first three strips. [#1 goes over #2 and #3 goes over #1] One of the three [#1 the first go around] will now be part of 4 & 5. Braid those three. Continue this pattern. :)
It seemed confusing to me at first, but you are simply braiding the left three and then the right three so the braids intertwine.