Here is a Little Guide.
Getting in Position Center the palm of your picking hand over the sound hole (acoustic) or pick-ups (electric) of the guitar. Curl your fingers and thumb at your second knuckle, and turn your hand so that your fingertips rest underneath the strings (so your second knuckles point towards the floor). Your hand should be in a loose claw-shape. Since we will start by playing a D major chord, we're only interested in the bottom four strings. Poise your thumb on the upper side of the fourth string. Your first finger will rest underneath the third string. Your second finger will rest underneath the second string. And your third finger will rest underneath the first string. Let your fingers settle in this position - try to make them feel as comfortable as possible.
Plucking the strings In your fretting hand, form a D major chord. Now, using a downward motion with the inside edge of your thumb, play the open note on the fourth string. Your thumb should not move far, and after you play the note, return it to it's original position. Do this several times, until the motion feels comfortable and natural. Then, play the third string, using an upward motion with the tip of your first finger. Again, there should be minimal movement by the finger, and you should return it to it's original position after playing the note. Examine the motion closely as you do it, and repeat it until it feels natural. Then, repeat this process with your second finger on the second string, and finally with your third finger on the first string. Your fingers should always remain curled, and the motion should come primarily from the second knuckle down.
Now, try playing the strings once each, in order, from fourth to first. Be sure to use the correct fingers in your picking hand, and watch to make sure your technique looks good. Listen to the audio clip (in RealAudio or in MP3 formats), and compare your playing to it.
Changing Chords The general concept of simple fingerpicking is this - the thumb moves to play the bass strings when the chord changes, while the three remaining fingers remain stationary - always responsible for playing the same string. We will utilize this concept as we play the following example:

First of all - the fretting hand. All that changes from the D major to the C69 (pronounced "C six nine") chord is the second finger moves from the second fret of the first string, to the third fret of the fifth string.
Similarly, only one thing changes in the picking hand as well - the thumb will move to play the fifth string, instead of the fourth. So, the pattern we'll play for the above example is strings 4,3,2,1 four times on Dmajor, moving to strings 5,3,2,1 four times on C69.
Things to know: .Make sure your picking hand fingers are curled at the second knuckle. .Never let your fingers straighten out.
.Your palm should move very little in the fingerpicking process. All movement should be done with fingers.
.Your fingers should move back into position as soon as they've picked the appropriate note.
.If strings are ringing very quietly, it means you aren't picking hard enough.
.Some guitarists choose to anchor their pinky finger on the bridge of the guitar, while using the other fingers to pick the strings. Many other do not - my suggestion: experiment with both methods.
Hope that helps!!
"Taken out of http://guitar.about.com/"