I've only done one so far but might start making a bunch of t-shirt bags - a few for each car, some for the house, one for my purse, etc. I always make sure to bring a bag shopping and these are pretty small so they'd be handy to bring.
-Sewing machine or needle/thread
To start I cut off the sleeves (to form handles). I cut right on the edge of the seam so that once the sleeves were cut off I had a raw t-shirt edge for the handles. To make the bag opening bigger I cut away an oval of material around the collar. I just cut and hoped for the best but you could also use a big bowl to outline the opening if you want to make sure it's even.
I flipped the shirt inside out and sewed along the bottom of the shirt. I sewed across the bottom twice for extra strength.
To make the handles look a little nicer I cut two short strips of material from the sleeves and sewed them around the tops of the handles. I think it added a nice touch. :-)
Here is the finished bag!
I am definitely going to make more out of the random old t-shirts I have laying around the house.