Consult ASTM Standard C840-04 to determine the level of drywall installation required. Use Level 3 for a wall that will be covered with wallpaper or similar covering, Level 4 for a wall that will have a light texture or be finished with a flat wall paint, or Level 5 for a wall that needs a uniform surface with a light skim coating of joint compound over the entire surface and smooth texture for a glossy paint.
Cover the wall with drywall panels, fastened to wall studs with drywall screws and a screw gun. Use 1/2-inch- or 5/8-inch-thick drywall for most home installations. Drive screw heads slightly below the surface of the drywall paper, but not enough to break the facing. Set panel edges tightly together. Cover the heads of fasteners with two coats of drywall joint compound spread with a 4-inch drywall knife.
Tape joints and corners for all levels with drywall tape embedded in joint compound. Spread a coat of compound over the joint or corner with the drywall knife, press the tape into it and seal it with a second coat of compound. Put two more coats of compound over the taped areas, using a wider knife, and add a third coat over fasteners for Level 4; sand lightly between coats. Spread a thin "skim" coat of joint compound over the entire wall and sand it smooth for Level 5.
Put a drywall primer over the drywall for Level 3 and above; use primer compatible with the finish paint, wallpaper or other covering. All joints should be "feathered" at the edges, and all ridges, tool marks and other blemishes should be eliminated for Level 3 and above. Use Level 1 and 2, with just basic taping of seams and corners, for spaces like garages with limited visibility.