Turn off the supply of water to the bathroom. Remove any fixtures from the walls, including soap dishes and electrical outlet covers, using pliers or a screwdriver. Also remove molding or trim from the windows, ceiling and doors using a pry bar.
Wipe the walls with a damp sponge to remove accumulated dirt, debris or grime. Allow the walls to dry completely before installing panels.
Stand a wood panel against a wall. Draw a line on the wall along the upper edge of the panel using a pencil. Extend the horizontal mark along the span of the wall. Because you need to install the panels directly to wall studs, remove the drywall below the pencil line using a keyhole saw. Carefully remove the drywall from the section of the wall using a pry bar without damaging the exposed studs.
Measure the locations of the spout and faucet on the panel. Transfer these to a piece of cardboard or the box the paneling came in to create a template. Double-check the measurements to ensure the placement on the template is correct.
Drill plumbing holes through the paneling using a drill bit that is slightly smaller than the trim used to cover them. Periodically, hold the panel up against the wall to ensure the faucet locations and plumbing holes match up against those on the wall, and correct if necessary.
Spread construction adhesive to the wall studs. Center the panel over the studs before pressing it in place, ensuring everything matches up and it adheres to the adhesive.
Bore 3/16-inch pilot holes through the upper lip of the panel and into the corresponding stud. Hammer roofing nails through the holes to secure the panel to the stud. Work carefully to avoid cracking the panel. Repeat this process to install the remaining panels in your bathroom.
Install decorative trim or molding to cover visible gaps and raw edges around the panel. Secure the trim in place using silicone caulk.
Measure the height and width of a bathtub, toilet and other fixtures placed against the bathroom wall. Deduct the total area from the wall panel so you know how much you have to cut before installing it to the studs.
Run a bead of caulk along the edges of the bathtub to create a tight seal, using a caulking gun. Allow the adhesive and caulk to dry for the time specified on the label’s directions.