Create a steel blade. First, choose whether you want a white steel (pure and simple carbon-based steel which is characteristically sharp) or a blue steel (sacrifices its sharpness for edge retention, corrosion resistance and rigidity). If you wish to create the most advanced form of chisel, replace the steel blade with a laminated steel blade, or laminate your own over a charcoal fire. You are aiming for a blade with a hardness of Rockwell 64 on the Rockwell Scale of Hardness, according to Wood Work Web.
Weld the steel blade to a core made of iron. This creates what is known as the "neck". For decorative effect, you can twist the iron slightly when it's hot to create a feature.
Make a hollow wood handle from an exotic hardwood like ebony or oak using a table saw. WK Fine Tools report that hardwoods are superior to other woods, but ash and beech also suffice. Hold the wood in a table clamp. Plane off the corners. Carve the handle simply, or with a design, but make sure it is strong and comfortable to hold when complete. Use modeling clay to reproduce the exact shape and size of the end of the chisel blade, so the hole in the handle will match in depth.
Attach the handle to the iron core.
Sharpen the blade for maximum performance. To do this you will need to sprinkle your silicon carbide on the 800 to 1,200 Japanese water stone, place the chisel blade flat against the stone then slide the 3,000 to 8,000 water stone across the edge of the blade you wish to sharpen. The 8,000 stone is superfine, as explained by Hand Cut Dovetails. Ensure you sharpen the same edge that already has a sharpened surface rather than the opposite, blunt edge. This will prolong the overall life of the tool.
Wipe the chisel blade with tool oil using a cloth to remove loose particles of water stone or steel and to form a protective oil layer on the blade.
Store the chisel in a safe, protective container (air-tight is best) until you need to use it.