Obtain or design a source image. This can be anything from a photograph to your own visual art. The image should be square in its dimensions. Many CD covers are collages of some sort. Make sure you have the rights to whatever images or pieces of art you use. Ultimately, the best way to avoid intellectual property problems is to make your own.
Confirm that your original image is at least as large as the CD cover will be. This will avoid the problem of the resolution becoming poorer if you are resizing the image. The dimensions of a CD front cover are: 4.724" by 4.724" (or 4.974" by 4.974" if the design will bleed over the standard edges)
or
12 cm by 12 cm
or
709 pixels by 709 pixels
Upload or scan your image onto a computer if it was not made on a computer.
Open the image in an image editing program. Paint.net is a fairly comprehensive, free program for Windows. Higher-end programs, such as Adobe Photoshop, are available for purchase.
Re-size the image so that it is exactly the size of the CD cover.
Add any desired text that is not already on the image. Often, but not always, the artist and album name are visible somewhere on the cover. Ultimately, this is a creative choice.
Print the image in the desired quantity if you are printing it yourself. If you will not be doing the printing, send the image to the person or company that will.