Choose a rock approximately the size you want to work with. Cutting large chunks of rock is not possible with the Dremel tool. Softer rocks, such as sandstone and limestone, work best with these tools.
Attach the carving attachment to the Dremel for sculpting the rock. You can pourchase the carving tool as a set that includes a variety of carving and engraving tools. Use the tool to sculpt the rock into the shape that you desire.
Engrave the rock, using the engraving tool attached to the Dremel. This works well for small, detailed work such as lettering.
Attach a polishing tool to the Dremel to polish a finished piece of rock. Polishing tools come in a variety of grains, depending on how smooth you wish the surface to be. Experiment with the different grains on a separate piece of rock before using the tool on the one you are working with, to find the best grain for your purposes.