Decide how tall your retaining wall will be. Divide this height by 8. The number you get is the number of inches you should bury the base layer of your retaining wall. So, if your retaining wall is going to be 32 inches tall, you will need to bury the base layer at least 4 inches.
Mark where the retaining wall will be, with spray paint. Measure back from this line the width of the stones, bricks or blocks you will be using. This will be the area you will dig out to create the trench that the base of your retaining wall will sit in.
Use a shovel to dig out the trench. The trench will need to be deep enough to get below the frost level in your area. This means that people who live in a colder climate will need to dig a deeper trench. If you live in an area where the ground does not freeze, dig your trench 6 inches deep plus the number you got in Step 1. So, in the case of the example, 10 inches deep.
Lay strips of landscape fabric in the trench. Fold the strips in half the long way and position them so that the opening is facing downhill. Open the strips so that you can pour the gravel in.
Pour 4 inches of gravel into the trench, over the landscape fabric. If you have a deep frost line, add a little more. Use a rake to level the surface of the gravel. Fold the landscape fabric over the top of the gravel. Place a 4-inch perforated PVC pipe in the trench. Cover the pipe with more gravel.
Use a hand tamper to compress the gravel. Pour coarse sand over the gravel. The sand layer should be approximately 1-inch thick. Use the hand tamper over the coarse sand.
Place your retaining wall blocks, rocks or bricks into the trench, directly on the sand. Bury them the appropriate depth for your retaining wall's height. Push the blocks tight up against the edge of the trench and make sure the sides of each block are tight against each other.
Use a level to make sure the blocks are sitting straight across. Adjust the blocks as necessary by adding or removing some of the coarse sand. Lay crushed stones as a back-fill behind the base layer and tamp it down.