Video by my ever-awesome collaborator, noahw.
Step 1: Obtain Squid
If you purchase squid, make sure they are still whole- if they're pre-cleaned all of that wonderful ink will be gone!
A fresh squid has reddish-brown spots on a white or cream-colored body- if the flesh has started to turn pink or smell, buy your squid elsewhere. Boxes of frozen squid should be solid, without evidence of leakage or freeze-thawing. Small squid are tastier and easier to cook, but they have less ink.
Step 2: Remove ink sac
First, pull the head and tentacles out of the body cavity. The guts will come along with the head: look for the small thin silvery sac about halfway along.
Carefully detach the ink sac, taking care not to puncture it. It's attached at the ends, so just slip your knife underneath and cut away from the center to remove it.
Step 3: Prep container
If you're going to print with your ink, put a tablespoon of matte medium, linseed oil or other ink carrier medium into the bowl. To cook with your ink, use a tablespoon of water or vinegar instead. It's easy to dilute your ink later- start concentrated now to keep your options open.
Step 4: Collect ink
Squeeze behind the head to extrude the beak, and remove it from the center of the tentacles. Now cut the tentacles off just below the eyes, taking care not to puncture the eyes. From the cut end you can see the ink deposits- they're the dark bits just behind the silvery back side of the squid's retina. Poke your knife into the ink, and gently squeeze the additional drops into the bowl.
Repeat the process with the rest of your squid, setting aside the tentacles and bodies for dinner.
Step 5: Printing
Rinse the bowl and strainer with more of your ink carrier medium, and scrape both with the spatula to remove any last bits of ink. Discard the ink sacs, and stir your ink into the carrier medium.
Test for color and dilute as necessary, then print as you would with normal ink.
Step 6: Cooking
Follow the recipe of your choice, and when it says to add your squid ink either strain it in as for printing, or simply dump it in, ink sacs and all. The sacs are perfectly edible, and generally unnoticeable unless particularly large. Rinse the ink bowl with a bit more liquid, and scrape with a stain-proof spatula to make sure you've got it all.