What you'll need:

Heat Treating Furnace - I've got another instructable showing you how to build this furnace.
Source of heat - I'm using a MAPP Gas torch. This one I'm using is quite small and only just puts out enough heat. If you're using a similar sized torch with LPG (Propane), you may not be able to get it up to a high enough temperature.
Tongs/pliers - something to hold the hot metal with.
Quenching liquid. I'm using plain ol' Canola oil - this doesn't conduct heat as well as water does, so the rate of cooling isn't as rapid as if I was to use water. There are specialised quenching oils that have well defined rates of cooling - you may need to use these if you're heat treating something a bit more fancy than high carbon steel.
Container for the quench. Ideally it will be something non-flammable. All I had that was big enough was some 100 mm PVC pipe. This is not ideal! If you've got something made out of metal, please use it!
Fire extinguisher. You're dealing with red-hot metal, a gas torch and flammable oil. You MUST have something to put out a fire on hand. If you're using a fire extinguisher, make sure it's suitable for oil and grease fires. I'm using a dry chemical extinguisher, it's red with a white stripe around it. It's likely full of Sodium Bicarbonate AKA Baking Soda.
Magnet - unless you've got some other way to determine the temperature of the metal, like a non-contact thermometer, a magnet is a good way to judge if it's hot enough. When steel is heated up, it undergoes a transition where it will no longer attract a magnet. This is pretty close to the ideal temperature that we want to heat up the steel to.
Finally, you'll need something made of steel to heat treat. I'm using a knife I made.

Heat treating knives and other tools is really important. Steel is sold in an annealed state so it's soft and was to work. Without heat treating, all you've got is a knife-shaped piece of soft metal, It won't hold an edge very well and it won't be very strong.

Step 1: Apply Heat

You can see that at room temperature, the magnet is strongly attracted to the steel. Put the item to be treated in your furnace, and turn up the heat.

If you followed my previous instructable, you'll see I've also made a door for the oven, this helps keep the heat in and ensures that temperatures are more even inside the oven.

Even with the addition of the door, it was considerably hotter up the back of the oven, where the gas burner is - I'm considering filling in the hole I've made and making another port for the burner 1/3 to 1/2 the way down the side to try and even out the heat - at least along the area where the blade is.

I'm not too concerned about heat treating the handle - this doesn't need to take an edge, rather if it's softer it will be more flexible and less likely to crack.

It took something like 10-15 minutes for the entire blade to get hot enough that it no longer attracted the magnet (that I've put on a handy wooden stick so I didn't need to get my fingers too close to the red-hot metal!)

Unfortunately I couldn't take any photos of this part of the process as I needed both hands to test for magnetism and then get the blade back in the furnace before it cooled down too much.

Step 2: Quench in Oil

Keep checking with the magnet until the entire blade is hot enough - don't worry about the whole handle getting up to temperature, and don't be too concerned about the spine of the blade - it's thicker so will take a bit longer to heat up. Ideally the entire piece will be a nice even temperature, but I just couldn't achieve that with this furnace.

When you're at the right temperature, carefully remove the blade from the furnace and place it tip-down in the oil. You might get it flaring up here, I was lucky and there weren't any flames. I drilled a hole in the handle to hang the blade from - leave it in the oil (swirling it around a bit to even out the temperatures) until it's cooled down enough to handle.

As you can see from the results when I pulled the blade out of the oil, I got some warping along the blade. I inadvertently ground this section of the blade too thin and thought that it may cause me problems.

You probably want to keep the thinnest part of the blade to about 0.5 – 0.8 mm (0.02 - 0.03") in thickness, any thinner and you greatly increase the risk of warping the edge of the blade during the quench.

Step 3: Temper, Temper!

The final step in the process is tempering.

Once the steel has been heated and then quenched in the oil, it's now very hard. Hardness ≠ toughness. Hardened steel that hasn't been quenched is very brittle and can easily shatter if dropped.

What we now want to do is bring the hardness down a bit to re-introduce some springiness and flex into the metal. This will result in a far tougher blade that while it has a hard edge that stays sharp, it's able to flex and bend instead of breaking.

For high carbon steel, it needs to be heated up to 200°C (400°F), held at this temperature for an hour and then left to cool back down to room temperature. This is then repeated another two times – for a total of three heat cycles.

Many online guides say to only do this when your wife is out, or to use your own oven for the heat treat - this is probably the case if you use old motor oil or something else that's not edible for your quenching process. I used fresh canola oil and it just smelled like baking – my wife even decided to throw in a batch of muffins into the oven while I was doing this, for a win-win situation all-round.

Leave it to slowly cool down at the end (i.e., don't dunk it in water or anything like that) and then you can get on to the final finishing and sharpening.