First of all let me make it clear that overclocking basically means to over-work your hardware and make it operate beyond what it was designed to do. This can sometimes result in permanent damage to your hardware. But don't be afraid, if you carefully follow these instructions, be patient and calm, overclocking will become second nature and you won't end up damaging anything. Trust me!

Let me also make it clear that there can be no definitive step-by-step guide to overclocking in this world, each individual component has different limits and each motherboard has different options and BIOS versions, meaning that OCing (I'll refer to overclocking as OCing from now on) is more of an art then it is a science. This instructable is strictly for Intel CPUs, AMD OCing is drastically different.

Step 1: Requirements and Considerations

First of all, I would like to mention that OCing of Intel CPUs can be done in two main fundamental ways:
1) Increasing the Front Side Bus (FSB), which means to increase the data transfer rate between the CPU and RAM
2) Increasing the multiplier, this option isn't available to most users since almost all Intel CPUs apart for the Pentium Extreme Edition and Core 2 Extreme have their multipliers locked.

Another thing is that we would be using the BIOS to perform all our tweaks, there are various softwares out there, but they only support a limited number of motherboards and are not that reliable. Also note that when you OC CPUs, you are also OCing your motherboard (in which the FSB is implanted) and your RAM. OCing RAM is notoriously tough and risky, but you can deal with this issue by decreasing the FSB:DRAM ratio we will be discussing later.

Ideally, you'd want these motherboards to OC on:
Intel P35
Intel X35
Intel P45

These motherboards are not so good at OCing:
Intel 946 chipset (though I personally have it and managed a 25% OC without any problems)

Perhaps the biggest problem with OCing any component is overheating. If you want really high OCing capacity of 70%+ then nothing other then a water or liquid cooling system will do. mid-range to high-end air cooling is known to be able to OC to around 60% while stock cooling can only reach 30% at max (my E2160 has stock cooling and a 25% OC). There is no exact temperature limit for any CPU. But as a general rule, you wouldn't want your temperature at any more then 75 (degrees celsius) under load. Having it at above 60 degrees shortens the lifespan but that shouldn't be a worry if you don't plan on using your CPU for more then 2 years.

Recommended software
To check for basic statistics regarding your CPU, I strongly suggest that you download the CPU-Z utility from:
http://www.filehippo.com/download_cpuz/

And get Speedfan for closely monitoring your temperatures, but before this, look around the CDs your motherboard came with for a specific utility for monitoring them. ASUS motherboards for example, come with ASUS PC-Probe which is far more accurate then universal monitors. But here's the download link if you don't have one:
http://www.filehippo.com/download_speedfan/

Also, download a simple application called SuperPI, which essentially gives your CPU a task to do and times how long it takes for the task's completion. Note that this application doesn't support multi-threading meaning it can only utilize the power of one core even if you have 2 or 4 But the purpose here is to check for basic stability and performance increase. You can get it form here:
http://www.techpowerup.com/downloads/366/Super_PI_Mod_v1.5.html

Step 2: Entering the BIOS

Now then, its time to get down to some actual OCing. Enter your BIOS and navigate to something like "Advanced Settings", if you have an ASUS motherboard, then I can tell you to straightaway enter the "Jumper-Free configuration" in the "Advanced" tab. Regardless, in all motherboards, all the OCing options are located in one place. For details as to where these options are, refer to your motherboard's manual or download it online.
I recommend that before proceeding, you disable C1E support. For ASUS motherboards, it can be found in the "CPU Configuration", its optional though, I haven't done it.

Step 3: Changing the Values

Ok then! Lets get OCing. First of all, you want to increase your bus speed which is at 100MHz - 400MHz. Note that this value, multiplied with the multiplier, equals your final CPU clock speed in MHz. So in the case of my dual-core E2160, the default bus speed (200) multiplied by the multiplier (9x) equals 1800MHz or 1.8 GHz. So, get down to increasing the bus speed, make only minor increments at once, don't get over-confident or impatient, this is what results in accidents. Increase the value by 5 at maximum at one time. Then save changes and exit the BIOS. Next, see if your Windows boots or not, if it fails to boot or restarts automatically during or after the boot process, it means you've gone too far. Re-enter the BIOS and step the CPU back down.
If it goes strong however, do some benchmarking of your system using something like SuperPI, and to be 100% sure, run some games for a while. If it remains stable, head beck into the BIOS and step the CPU up again, repeat this process until your you experience instability.

Step 4: The CPU Won't Overclock Any Further!! What to Do??

Sooner or later, you'll hit a point where the CPU just can't take it anymore and you will start experiencing instability. But don't be depressed just yet, there is a way around:

1) the most common way is to increase the CPU vcore voltage. Make only 0.05 - 0.1 volts increments at once, anymore could permanently damage your CPU. This is a very common tactic since an OCed CPU needs more watts and volts to handle the extra tasks at hand. Also note that "AUTO" settings aren't at all good ionce, even at stock, they supply too much or too little voltage. Also don't increase your voltage too much, anything above 1.4v for a Core 2 chip is not recommended since it increases electronic migration and drastically decreases your CPU's life.

2) Before you increases the voltage however, I recommend that you step down your RAM timings as well. Check your specific RAM model number for its details specifications. If you find that it has something like PC2-5300 on it or 667 MHz, then it means your RAM operates at 667 MHz. If it has PC2-6400 said or 800 MHz, then it means your RAM operates at 800 MHz. If you have PC2-4200 or 533 MHz said, it means your RAM operates at 533 MHz. In cases of expensive RAM, you may have 1066 or even 1200 MHz RAM, which is, in effect, factory OCed RAM that is stable. Check CPU-Z for your RAM frequency. Make sure your RAM isn't OCed by anymore then 15% because this isn't very good for your RAM's life and health. Decrease your RAM's frequency by 133 MHz (which will be the default option i.e. you will be allowed to choose from 533, 667, 800 depending on the maximum frequency your RAM can handle). By doing so, your FSB:DRAM ratio automatically drops or it may be possibe that you have a direct option to change this ratio

In some motherboard BIOS, you might be able to enter a specific number manually which is even better. Once you decrease the RAM frequency, your OC will only add to that decreased number, which means, that in the end, your RAM will be operating somewhere close to its desired speed. The RAM's frequency will be mentioned as DRAM frequency in your BIOS. However, if you have 553 MHz (or PC2-4200) RAM, then you might not be able to select any lower option since this is the slowest speed at which DDR2 RAM operates.

Note: Theses specific numbers (i.e. 533, 667 and 800 are unique to DDR2 RAM. For other RAM types such as DDR, SDRAM the values will be lower while for DDR3, they will be significantly higher

3) Just be happy with what you have and quit OCing! (not the desired option for a brave person)

Step 5: Future Advice and Troubleshooting

No then, if you have been successful, you'll be happy to get some extra performance at no extra cost. But do note that, some time in the future, you may experience instability which may make a late appearance as your CPU ages. In such cases, down-clock your CPU just enough to make it stable.

You might find my guide missing some information, this is because I have tried to make it short unlike all the other guides on the Internet which are of 10 pages! I've shortened it to the best of my capabilities and have missed out on a number of things. If you have a query, then please feel free to ask any questions through comments.

As I said before, it isn't possible to make a complete how-to guide for OCing since it differs from case to case but, again, feel free to ask! And remember, (I don't want to sound like an Intel fanboy but I'm forced to say this) I can only help you with Intel processors. AMD overdrive and HyperTransport works in a completely different way, but you can still ask and hope for someone else to answer.

HAPPY OVERCLOCKING!