Things you'll need:
1/4" key ring
1" key ring
Fabric of your choice
Step 1: Layout
Move the key ring around on the fabric until you find a spot you like. Be sure your fabric is doubled up so it can be worn with either side showing and keep in mind that each side will differ.
Step 2: Cut out fabric
Cut out a square piece of your fabric about 1 1/2" x 1 1/2". Link the 1/4" and 1" key rings together.
Step 3: Sliding fabric between 1" ring
Cut a slit maybe 1/4" into the middle of 1 side of the fabric. This will be the "top" of the pendant and where the 1/4" ring will sit between. I like to try and keep the 1/4" key ring in the center of the recessed part of the 1" key ring as much as possible. As you slide the fabric between the key ring, keep it as even as possible and you will be forced to stop when the end of your slit has reached the 1/4" key ring.
Step 4: Begin sewing round
Thread your needle and start as close to the 1/4" key ring as you can. Sew around the whole key ring until you come back to where you started. Keep the needle as close to the ring as possible and keep taut.
Step 5: Finishing touches
When you are done sewing all around, put a few stitches along where you snipped down a 1/4" to help prevent fraying. Cut the square down to a circle around 1/8" from the ring. Then with a very fine pointed pair of scissors, snip ever so slightly into the 1/8" worth of fabric. When you've completed snipping, rinse it under some water and rough up the edges with your fingers. When dry, pull slightly on any loose threads of fabric and snip where it may be uneven. Put a chain of your choice through the small key ring and there you have it.