If you have any questions, please leave a comment and I will update this post to address them. If you're having trouble seeing details in the photos, clicking on one should open the full-size version.
Materials: 12" x 6" of quilting weight cotton fabric, 10" length of 3/8" wide elastic, all-purpose thread to match your fabric.
Tools: a sewing machine, scissors, ruler, straight pins, iron, bodkin or safety pin, pencil or chalk to mark fabric.
Notes: While this tutorial is fairly simple, you will need basic machine sewing skills. Ironing and clipping threads between steps will make for a nicer finished garment. Always back-stitch at the beginning and end of straight seams to secure the thread.
Step 1: cut your piece of fabric into two 6" x 6" squares.
Step 2: Mark which edge will be the top. Mark the sides, 4" up from the bottom. Make sure you mark both pieces of fabric.
Step 3: Zig-zag around all four sides of each piece, separately, in order to finish the edges. Then place the two pieces with right sides facing each other, and match up the marks you made in Step 2. Pin the sides together.
Step 4: Sew a 3/8" wide seam along one side, from the bottom up to your mark. Repeat for the other side.
Step 5: Press the seams open, from the bottom to the top of the dress. You will have a slit at the top of each side - they will become the arm-holes.
Step 6: Starting at the top left, sew down the slit on one side, pivoting around your needle when you reach the seam at the bottom of the slit, then sew up to the top again. (I've sewn about 1/4" from the edge) Repeat for the other slit.
Step 7: Fold down the top 5/8" to make a casing. Pin in place and press. Repeat on the other side.
Step 8: Sew down the casing 1/2" from the top edge. Repeat for the other side.
Step 9: Fold up the hem 5/8" all the way around, pin in place and press. Sew down the hem 1/2" from the bottom edge.
Step 10: Turn dress right side out. Using the bodkin or safety pin, thread elastic through one casing, then through the other, ending on the same side where you started. (I've used ribbon to demonstrate, as it was easier to see).
Step 11: Cinch the elastic around the neck-opening, until it's the right size to fit around the neck of the toy, but loose enough to stretch over the head. It will help to have a finished toy handy. Tie a tight square knot. Cut the elastic ends about 1/4" long, then tug on the elastic until the knot is hidden in the casing.
Step 12: Dress your toy.