The interwebs has gone peplum crazy. I first noticed it on Tina Fey at the Oscars, but now I can't browse without stumbling across it repeatedly.
Start with a shirt that's too big for you. You want the shirt to be long and swing freely around the bottom edge. (My shirt was about two sizes too big. I found this beauty at the thrift store for $4. The beautiful polka dot fabric was in such good condition that I couldn't pass it up!)
Decide on the placement of your peplum and cut across the shirt. Ideally, you want this line to fall a couple inches below the smallest part of your waist. You don't, however, want to leave the peplum part too short. We want peplum, not a frill.
Next cut off the sleeves, closely following the curve of the seam.
With the shirt turned inside out, take in the side seams to fit your measurements. Pin and sew.
Run a basting stitch through the top edge of the peplum piece. Gather until it fits the top part of the shirt. (You probably won't have to gather too much.) Make sure the gathers are evenly distributed! I found it was easiest to line up the side seams and pin those first, and then adjust the gathers on the front and back separately.
With right sides together, line up the raw edges and pin. Sew around the raw edges with a stretch stitch. Don't forget to remove the basting threads!
And that's it! As you can see, I didn't add the sleeves back. Sleeveless is so much easier to layer, and I have to layer often. I saved them, however, and maybe I'll add them later if I change my mind.... Knit fabric is very forgiving - no need to finish the raw edges! This project only took about 30 minutes (and that included photography). I want to do peplum top with different patterns (or a pattern and solid) next.