Start with 4 cups of milk, whole, 2% or skim, doesn't matter. The more fat in the milk the thicker it will be so it's up to you. Stir in 1/4 to 1/2 cup dry milk, if you want a little thicker add in the 1/2 cup if you're not bothered by thickness of your yogurt you can go with 1/4 cup. It's totally up to you and doesn't hurt the yogurt one bit if you play around with this measurment.
Heat the milk over medium high heat for a few minutes, stir frequently. DO NOT LET THE MILK BOIL. This kills the active bacteria in the milk and your milk will not make it to the yogurt stage. I usually pull the milk off the stove a minute or two after steam has started to rise off the milk and the top gets a little frothy.
Now you need to let the milk cool to a lukewarm temperature. You can place the pot in the fridge for about 20 minutes, stiring every few minutes and testing to see if it's cool enough. Or you can use my trick and put the hot pot of milk in the sink in a water bath, with ice cubes. If you do it this way, (keep stiring of course) then it'll only take 4 or 5 minutes until the milk is lukewarm. Don't let your milk drop below 90 degrees, the bacteria will go inactive, so if you have a candy thermometer you can use it for yogurt as well.
At this point you want to go ahead and plug in your yogurt warmer to get it pre heated so you don't drop the temperature of your milk when you pour it in.
Sadly, I've left out a picture of the next step. Take 1/2 cup of store bought yogurt with live cultures and mix it in a seperate bowl until smooth. Pour in some of the lukewarm milk, like 1/2 cup and mix the two together until smooth. DON'T STIR TO HARD; just mix until smooth. Then add this mixture back to the pot of lukewarm milk and stir gentle until mixed in. This step adds in your cultures that will start the yogurt process.
Pour your luckwarm milk mixture into the yogurt container that came with your yogurt maker (if you have one, if not I'll explain how to do this step later). Snap on the lid.
Place the container in your pre-heated yogurt warmer and cover with the outer lid.
I got a set farther and cover my maker with a dish towel, sometimes two. If your house is drafty or if the only clear counter space you have is close to a window you should cover your warmer with a dish towel as well. The warmer your maker the quicker your yogurt will firm up.
After 2 hours you're ready to eat yogurt. This will keep in the refrigerator at least 5 days, if it lasts that long. It never makes it past day 2 in my house. :) Now you can use 1/2 cup of your homemade yogurt as your yogurt starter for your next batch instead of store bought.
If you don't have a yogurt maker/wamer then follow these directions for warming your yogurt:
Prewarm a thermos by rinsing it with warm water. Pour in the lukewarm milk already mixed in with the 1/2 cup yogurt starter and seal the thermos. Leave for 4 - 10 hours, depending on how tart you want your finally yogurt. Remove the lid and place thermos in the refrigerate to chill. Once chilled move the yogurt into a glass jar or any container with a lid and store in the refrigerate.
There are other methods, that use glass jars and towels inside a larger cooler with a lid. I haven't tried this method but I do hear that it works. Let me know if any of you out there give it a try.