Choose a POD service. CreateSpace, Lightning Source, and Lulu are three of the most popular, though there are many others (see Resources). To choose the right one for you, consider details like formatting requirements, how they distribute, whether books published through them will be searchable on major online bookstores, how much their service costs and if they take a percentage of royalties. Most POD services will have an "FAQ" page or other detailed list of their services on their website which should answer all these questions. Look online for user reviews of the services you are interested in. The Absolute Write Water Cooler, an online discussion forum for writers and publishers, has an entire section devoted to Self-publishing and POD (see Resources).
Design the book. Most POD publishers require that the publisher design the book's interior and cover. You can hire a professional designer, or do it yourself with a desktop publishing program such as Adobe's InDesign and QuarkXPress. You can also do book layout in word processors such as Microsoft Word or Open Office. These programs are more affordable. And while they don't have all the options of the others, they can still produce a good result. Just be sure your program can export the finished layout as a PDF file, as this is most likely the format your printer will require.
Send the printer your files according to their preferences. Most POD printers will let you know if something is wrong with your layout, and will either work with you to fix it or fix it themselves for an extra price. When the POD service has approved your layout and lets you know it is ready to print, your book will be ready for sale.