Step 1: Materials and Supplies
A toddler-size T-shirt (mine is a 2T)
small wooden purse handles
fabric for lining the bag (amount depends on the size of your shirt; 1/4 yard was plenty for mine)
fabric for making a pocket
featherweight iron-on interfacing (enough for the inside of the shirt, half the lining, and the inside of one sleeve)
coordinating sewing thread
a ruler for measuring and using as a straight edge
a pen or tailor's chalk for marking the fabric
You will also need an iron, ironing board, and sewing machine. Bonus points if you have a zipper foot for your machine.
Tips: Before starting, remove any cloth tags from the inside of the shirt. Fold and tuck your shirt to find the final shape and size and test it with the handles.
Step 2: (Optional) Interface the Shirt
1) Turn your shirt inside out and lay it nice and flat on the ironing board. Cut a piece of featherweight interfacing wide enough to cover the shirt front and back, minus the sleeves.
2) Place the interfacing over the top of the shirt, lining up the cut edge with the side seam of the shirt. Make sure the interfacing covers the shirt from hem to neckline. Iron the interfacing to the front of the shirt, ignoring the sleeves. Check that the side seams aren't folded under.
3) When the front is done, carefully turn over the shirt. Cut the interfacing from the top edge to where the bottom of the sleeve connects to the body. This will allow you to leave the sleeve out when you fold the interfacing over to the other side of the shirt.
4) Fold the interfacing over the shirt, making sure it's flush against the side seam. Again, be sure to smooth out any wrinkles, then iron the interfacing to this side of the shirt.
5) After the interfacing has been ironed down, trim away any excess along the side of the shirt.
Note: Don't worry about adhering some of the interfacing to the inside of the collar or sleeves. These parts will be trimmed away in the next step.
Step 3: Cut Apart the Shirt
1) Remove the sleeves, leaving about an inch of extra fabric. This is your seam allowance for sewing up these edges. Save at least one of the sleeves for later.
2) Cut straight across the top of the shirt just below the front neckline. Cut as close to the neckline as possible, especially if the design on the shirt is placed high, like mine is. A cutting mat and ruler can help make a straight cut.
(Optional) My shirt had a double rolled hem. I cut off the bottom edge of the shirt just above the hemline. I also followed the curve of the original hem, though I should have just cut it straight across. If your shirt has a plain folded hem, there's no need to remove it unless you want to reduce bulk along the bottom seam of your bag.
Step 4: Cut the Lining Fabric
2) Trace all the way around your cut shirt. Tailor's chalk is excellent for this purpose.
3) Trim the lining down to the chalk line along the top and bottom edges. Do not cut the sides of the fabric. The extra fabric is your seam allowance for sewing up the sides of the lining.
Step 5: (Optional) Add a Pocket
(Sorry, I didn't take photos of this part!) Lay your two pieces of pocket fabric right sides together. Stitch around the sides and across the top. Leave the bottom unsewn for now. Clip the corners, then turn right side out. Carefully use the tips of your scissors, a pen, a chopstick, or a similar implement to help turn the points of the corners.
2) Fold about 1/2 inch of the open bottom edge of the pocket towards the inside, then pin the opening closed. Press with an iron to neaten and set the edges.
3) Take another piece of interfacing and iron it onto the back of one side of your lining. This will help give the pocket some support. Trim the excess interfacing all the way around.
4) Pin the pocket in place on the front of the interfaced side of the lining. Make sure the unsewn edge of the pocket is at the bottom. Sew the pocket to the lining along the sides and bottom. Your lining should now look like the fifth photo.
Step 6: Shape the Lining and the Bag, Separately
2) Take the shirt, turn it inside out, and sew it closed along the bottom.
3) Make a mark on the bottom seam of the lining, about 1 inch from the bottom corner of the bag. Pinch the corner so that the side seam aligns with the bottom seam, and pin in place. Sew across the corner at this point. Do the same for the other bottom corner and the bottom of the shirt as well. The bottoms of the lining and the shirt should look like photo 4. Trim the corners near the stitch lines. These seams will give your bag a little bit of a flat bottom.
Step 7: Prep the Handles
2) Measure the openings in the bottoms of your handles. (Mine were about 3/4 wide.) Add an inch to this measurement, then cut two narrow rectangles from the sleeve measuring 8 inches by your handle measurement. Fold the strips in half lengthwise, right sides together. Pin, then sew a seam down each long side 1/2 inch from the edge. Do not sew the short ends closed.
3) Trim the excess away from the seam, then carefully turn the strip inside out. Try to center the seam down the middle of the strips, then press the strips flat with your fingers. Cut the strips in half crosswise, so you have a total of four 4 inch strips. These should be just wide enough to fit through the openings in the handles.
4) Put one strip through each handle opening and fold over with the seams to the inside. Line up the edges then run a few stitches across the bottoms to hold them in place.
Step 8: Assemble the Bag
2) Pin the edges.
3) Sew the angled sides using the shirt's original seams as a guide. Start at the top edge, go down towards the side seam, across the side seam, then up the other side. Do not sew across the top edges yet.
4) Clip a notch at the side seams to reduce bulk.
5) Reach through one of the open top seams to turn the bag right side out.
6) Tuck the lining into the bag. If necessary, use the iron to press the top side seams so they're flat.
Step 9: Add the Handles
2) This next part is a bit fiddly. Take one of the handles and tuck the fabric strips hanging from it into the opening at the top edge of the back. Put them in far enough that the bottom edge of the handle is flush with the top edge of the bag. Make sure the handle is centered and the straps are straight, then pin the straps in place and pin the rest of the top edge. There are going to be a lot of layers of fabric where the straps go into the bag, so be careful when pinning and pin from both sides if necessary. Double check your strap placement. Look for puckers, uneven folds, raw edges poking out, etc.
3) When everything is pinned to your satisfaction, sew across the tops. Place your stitching close to the edge, snug against the bottoms of the handles. A zipper foot can make this easier but isn't necessary. Be sure to pull out the pins as you come to them and proceed slowly. There's a lot of bulk where the handles are inserted so be very careful.
Once the top seams are sewn, you're done! Admire your new bag and carry it with pride or gift it to someone special.