Begin at the bottom of your slope. Dig out a shallow trench in a straight line, digging down 1 inch for every 8 inches of planned retaining wall height, plus 4 to 6 inches for your base layer. Lay down 4 to 6 inches of crushed gravel (not pea gravel), ¾-inches wide or less, packing it down by hand.
Stake out a line along your trench, using two lawn stakes and a string tied between them. Stack retaining wall blocks, using the string as a guide, next to one another, offsetting the second level by half a block and pushing them back an inch or two to create a gradual inward lean toward the hill.
When you have constructed your wall, backfill using a well-draining material like sand or gravel against the stones to allow water movement. Fill the rest with purchased soil, which drains well and compacts less than garden soil. Continue this process up the slope.