I used this technique to create a big poster for a Daft Punk dance party my friends and I were throwing. I was really happy with the output, and the night before the event someone even stole the poster. That's a compliment in my book!
Sorry for the quality of the photo of the final product -- We finished at 2AM and were really tired.
-An image (most any format, but if it's already a vector (PDF, EPS, SVG, etc.) you can skip some steps).
-Laser printer: Preferably one where you don't have to pay per page. Depending on your image, you will use a lot of toner, so keep that in mind.
-Paper cutter (scissors will work, but will take much longer)
-Markers, Colored Pencils, Crayons, etc. (optional): Adding color accents can really have some outstanding effects.
-Software: Here we have some choices:
-Adobe Suite: This is expensive software but the way to go if you can. I had access through my school, so check on that if you are associated with an institution. I used Photoshop, Illustrator, and Acrobat.
-Open Source Software: You can definitely accomplish this Instructable using only open-source software. Try GIMP for raster manipulations and Inkscape for vector tracing, manipulations, and tile printing.
-Web-Based: if for some reason you don't want to download a bunch of new software, you should be able to use web services exclusively. The only downside is that (as far as I know) there aren't too many web based resources for editing vector graphics. You could use Photoshop.com (requires creation of a free AdobeID) for raster work, and Vector Magic (or Potrace) to do a vector trace of raster images. I haven't done this, so let me know if you find a good workflow.