Sometimes you need to get your design onto paper or whatever you use, and a plotter is either too expensive or unavailable. If you have a projector, your day is all saved and stuff. See how.

Step 1: What You Need

Well, I think you could theoretically use lots of stuff, but here's what I used:

-stencil material

I like to use very thin polycarbonate plastic. You can get large 2'X4' sheets for ~$2 from mcmaster.com

-stencil design

I usually do either pure photoshop vector or image manipulation with the cutout filter

-projector

We had one around the office for playing Halo on.. I mean... meetings.

-permanent marker

Any kind will do, but Sharpie has my money.

-cutting knife

I like exactos. If you cut anything thicker than .004" polycarbonate, try getting the thicker-handled ones.

-fresh, sharp blades

Cost: ~1.50USD. Benefit: Much, much easier on your hands.

-cutting mat

I don't really care that much about this- I only have this nice one because I rescued it from a dumpster. Cardboard will do in a pinch.

-tape

Anything will do, even tacks if you don't mind holes in your wall. I had cellophane tape handy.

Step 2: Design Stencil

I like using Photoshop.

For colors like this light blue, you can lose your mind trying to trace the untreated edge... or you can slap a 1-3px black stroke on those layers.

Step 3: Project Stencil Onto Wall

Use a projector.

If you're concerned with scale, you can project a few elements with a defined scale, and adjust the projector until it fits.

I wasn't really concerned with that, and I don't think many people making stencils will be.. so I skipped it.

Step 4: Tape Up Material

Use some tape or tacks to put up the material so the image projects onto it decently.

Step 5: Trace Stencil

Carefully trace the stencil projected onto the material with the marker. It's kind of a pita to do this accurately, especially with lots of caffeine and/or energy drinks in your system. I suggest a good portion of healthy fruits and/or veggies and a stool to steady yourself.

If you had to do this a lot, I'd suggest a setup with a large transparent glass table, and the projector below it. Tracing things while seated is much easier than doing it perpendicular to a gravity well.

Actually, that makes me think... I wonder what tracing something in zero gravity would be like? I think you might have to brace yourself of a bulkhead or something of the sort.... weird.

Anyways, you'll likely need to modify your design for contiguity- an island of material will fall right out of the stencil, you need to build it with little 'bridges' to connect it with the rest of the stencil- see the images to see what I mean.

A technique I like to use to double-check what I draw before I cut it out is to simply draw a little X on the bits I'll be cutting out, then stepping back and imagining them all falling out.

Step 6: Cut Stencil

Now's the fun part. Grab your knife, once-over the design again to make sure you haven't screwed it up, and start cutting it out.

Make sure to use the cutting mat, or you'll have your mom / significant other / whinydude on your case.