This shirt had 3/4 length sleeves and I really wanted to make a bag out of this shirt as well. It's a little nicer than the previous tutorial, but you can't claim that this bag will be made from a completely intact shirt ;P
First, you are going to fold the top and bottom of your shirt over to sew the bag closed. Just fold it over enough to close it, unless you want to end up with a shorter bag.
Then you are going to fold your shirt front side in. Then after you pin the sides of the shirt together you are going to cut off the sleeves. Save the sleeves for the handle and sew the sides to make the bag.
Now flip your bag right side out. I had to put a pleat-type thing on the bottom because this shirt was really warped and the bottom was wider than the top.
Take your sleeves and cut the shoulder part of the shirt off to make it level with the underside of the sleeve. Basically, cut the sleeve so it so the ends are even.
Then, flip one sleeve inside out and pull it over the other sleeve so that the wrist sides are touching. Oh, and sew the wrist ends together.
Flip the inside out half of the sleeve back over so you have one big long tube. This is going to be the strap on the bag.
Pin the ends of the sleeve strap flat to the insides of the bag. Sew the strap to the bag.
You are finally done! and the strap to this bag is nice and wide on your shoulder, which means it's very comfortable. (unless you choose to carry rocks around in your bag)
Now you can decorate the bag if you want or just enjoy it plain!