Diagnose the Problem
Figure out why your lawn has declined. If you don't determine the problem, fixing your lawn could be a waste of time. For example, if grubs are the problem, you'll need to treat for them before laying a new lawn. But if too much shade is the problem, you're better off forgetting a lawn and investing in low-maintenance shade-loving ground covers instead.
Get a Fresh Start
If more than half of your lawn is screaming for help, start from scratch. Spray the lawn with an herbicide containing glyphosate (be sure to follow all directions on the packaging). It kills all vegetation but allows new turf to re-establish quickly.
Wait a couple of weeks after applying the herbicide, then mow the turf as short as you can. Don't be afraid to really scalp it -- this low mowing leaves the area with short, dead plants, to prevent erosion, and keeps the dead plants from shading your new lawn too much.
Rake, Rake, Repeat
Visit your local rental center and get a power rake. Don't worry, it's not as bad as it sounds -- many models are as easy to handle as the average lawn mower. To save yourself frustration, ask the clerk to show you how to adjust the blades.
You want to leave just the barest layer (about 1/4 inch) of thatch on the ground. Then rake off the remaining debris and compost it. You'll know you've raked enough when you see equal amounts bare soil and dead grass stems. Then spread a thin layer of compost over the soil and rake it in evenly.
Add the Green
Now it's time to plant. If you're using seed, follow the instructions on the package to determine how much seed to use. This is important: Not enough, and your lawn will be thin and scraggly. To make the seed application uniform, spread half the seed in a north/south direction, then turn around and apply the other half in an east/west direction. This will lessen the likelihood that you'll end up with bare spots.
If you're installing sprigs or plugs, it's just a matter of digging little holes and plopping the plants in place. Cut a small trench for sprigging and using a transplanter tool for plugs. You can usually buy this little tool from the same place you purchased the plugs.
Deter New Weeds
This is an optional step, but it's pretty easy and usually worth the effort. Apply a pre-emergence herbicide containing siduron. This product will prevent crabgrass seeds from sprouting, yet allow lawn grass seed to grow. Note: If you renovate in fall, this isn't necessary, because crabgrass is mainly a problem in spring.
When everything is planted, your task is to keep the area moist. For the first week or so after planting, be sure the soil does not go dry. After the grass is up and growing, it's like the story of the three bears: You don't want the area too dry or too soggy, but just moist. This may mean watering a couple of times a day early on (for short, five-minute applications). Over time, you can go to a once-a-day watering for 10 or 15 minutes. It's important that the moisture be applied evenly so that your seed doesn't wash away, creating bare spots.
When the grass shoots are about an inch tall, apply a starter fertilizer to encourage growth. The same goes for sprigs and plugs: After you see a couple of new shoots, apply fertilizer. But be sure to wait until there's growth -- you can burn roots if you fertilize too early.
When the grass is about 3 inches tall, give it its first mowing. This will discourage weeds and encourage the spread of your grass. This simple step makes a huge difference in the success of the project!
Be sure the mower blade is sharp the first time you mow; a dull blade could rip the seedlings right out of the ground. Then mow as normal once the grass is the height you want it. For the health of your turf, don't cut off more than a third of the leaf length in any one mowing.