Prepare rag strips to braid. Try to use fabrics of similar weight and material for easy braiding and washing. Cut them in 1 1/2-inch widths for heavier materials, such as denim, and 2 or 3 inches wide for lighter materials like cotton. The length can be whatever you have available, although longer strips will be easier to braid.
Fold strips if needed. Cottons and other light fabrics should be cut wider, as above, then folded in halves or thirds depending on how thick you want the strips to be. You can iron them flat, hold them flat as you braid, or roll them into cord-like strands for more rounded braids.
Begin the braids. Knot three strands of fabric together at the top. Then use a standard braiding process, laying the outer strands over the middle. Hold the top straight with a heavy object that will hold it in place, such as a weighted clamp, or by closing it in a drawer. As you go, you can turn the raw edges of strips under, rolling them in your hand, or you can leave them showing for a more rustic look.
Add new strips. When you get to the end of your strips of fabric, sew on another strip. It's helpful to have a clothespin to pinch the braid together right above the joining. Fold together about 1/2-inch of the old and new strips. Take a few stitches to lash them together. Try to have varying lengths of strips so that you don't have a large bump by sewing a new piece onto all three strands at the same spot.
Form a circle of the braid. When you have a long enough braid to serve as the rug's center, fold it in to make a small center circle. Sew the fold together with strong thread, such as denim thread. You can use any stitch you prefer, but popular ones are whip stitch, ball stitch or blanket stitch.
Wrap the braid around the center circle again. Sew it to the inner braid, edge to edge. Make your stitching secure, but not too tight, as you want the rug to lay flat and not be pulled upward. Do this repeatedly with all your braids until the rug is the size you desire.
Finish by tucking the end of your last braid under the previous round and sewing it securely.