turn the t-shirt inside out and lay it flat, Cut off the sleeves just outside the seams. Cut straight across the shirt, through both layers, just below the neck band.

Cut it up in the side to make one hole flat piece instead of the round one.
Lay your piece wrong side up and with the hem at the top and divide the piece into 1" wide strips. Make an even number of strips!
Leave 2" at the top.

now it's the time for sewing it back together. -but only the 2" uncut piece at the top.

Tie the strips together loosely in double knots. Continue all the way around.
When you're finished with the first round of knots and back to your starting point, take one of the strips from the first knot and one from the second knot and tie them together.
Continue around until all knots are tied in the second row.
For the third, fourth, fifth row.. it's just the same procedure :)
Continue as long as you have strips to knot or until you think it's long enough.

When wearing it as a scarf arrange it around your neck and fasten with a brooch, safety pin or whatever little cute/cool fastener you can get hold of ;)