Start with a t-shirt with a design you like, but that's at least a little too large.
Now grab another tee that fits you well. Flip your big tee inside out and lay your fitted tee on top. Fold the sleeves on the fitted tee so you can see the shape of just the body portion. Pin your big tee along both side seams, as well as along the curve of each armhole. If your fitted tee has some stretch to it and your big tee doesn't, be sure to leave a little space between your fitted tee and your pins. That way, your altered tee won't be too tight. You may also like to use two different colors of pins, as I did, changing out colors at the underarm.
Now sew along the side seams (the red pins in the picture above), stopping before you get to the armholes (white pins). Then you'll trim away the excess fabric about 1/4-inch from the pins, like so. Then you can remove the armhole pins.
Next you'll lay out your sleeve scraps from the big tee (still inside out) and place your fitted tee sleeve on top, lining up the hem and folded top edge.
Again, you'll pin around the fitted sleeve (red is where you'll sew, white is where you'll cut). This can be a bit tricky, but with some finagling, you can do it.
Cut around the pins. Then lay your first sleeve on the second sleeve and cut it to the same size.
Now sew along the red pins on each sleeve to create a tube. Then flip the sleeves right side out and insert them into the armholes of your shirt, with the shirt still inside out. Pinning these edges together can be difficult since they are both curved edges (and curved in the opposite directions). I like to pin the underarm seams together, then the opposite sides, at the top of the shoulder. Then pin halfway in between each of those pins, then halfway between those, and so on until you feel you have enough pins to hold it in place while you sew. Now sew it!
And there you have it - a too-big-to-baby-doll tee conversion!
Once you've got the process down, you can go through your entire t-shirt drawer...
I like my tees so much better now, i.e., I'll actually wear them now!