How to Hang Paneling on One Half of the Wall & Sheetrock on the Other Half

Measure how high the wood paneling will be and place a mark on the wall stud at one corner of the wall. Hammer a 6d nail at the mark so you can attach a chalk line later. Place a 4-foot level's straight edge on the mark. Check the level's bubble and adjust it as needed. Trace a line on the wall using the entire 4-foot edge.

Hook the foot at the end of the chalk box line to the 6d nail. Move to the opposite end of the wall, allowing the chalk line to unwind. Pull the chalk box line taut and align it with the 4-foot traced line at the opposite end of the wall. Hold the line taut against the wall studs and snap a straight line across the wall at the point where you'll place the top strip of furring.

Place the level on the snapped line at the center and at each end to ensure that the line is level across the entire wall.

Set the furring strips horizontally on the wall and flush the top edges to the snapped line. Nail the strips to each stud they make contact with using 8d nails. Cut the furring strips with a circular saw so that their butted ends land on the centers of the wall studs. Nail horizontal strips of furring half the distance to the floor and another right next to the floor. You should have three horizontal strips of furring running across the entire length of the wall.

Cut the wall paneling to height and lay it flush against the furring starting at one end of the wall and working your way to the other end. Fasten the paneling using finish nails.

Secure backing between each set of studs, directly above the top furring strip, by measuring between the wall studs and cutting a 2 x 4 block to fit. Slide the block between the studs with the wide face flush to the outside edge of the wall stud. Hammer 16d spikes through the opposite side of the studs to secure the blocking in between the studs.

Measure from the top of the installed paneling to the ceiling to determine the length of Sheetrock you need. Transfer the length to the Sheetrock and snap a line at this measurement. Scribe along the line using a sharp utility knife. Bend the Sheetrock gently at the cut to break it to the correct length.

Set the sheetrock's cut end on top of the furring strip and press it flush against the wall studs. Place drywall screws every 6 inches along the outer edge using a screw gun. Space drywall screws every 12 to 16 inches along the studs that run behind the center of the Sheetrock. Cut the Sheetrock so that all of its edges land on the centers of wall studs to ensure proper screw installation.