Dig a shallow trench, about six inches deep, along the line where you are putting the retaining wall. Make the bottom of the trench level and free of protruding rocks and roots.
Use your largest stones first to save yourself the trouble of lifting them. Position the stones firmly in a straight line along the bottom of the trench. Fill in between the large stones with a mixture of cement and smaller stones, being sure not to leave any air spaces within the wall area.
Build the wall up to the desired height by adding stones, being sure to keep the wall as vertical as possible. A slight lean toward the side that will be backfilled is all right, but don't allow the wall to lean in the other direction or it will be substantially weakened.
Finish off the top of the wall with flat stones angled slightly away from the side that will be backfilled so the wall will shed water. Fill the joints between the rocks with cement to create a smooth surface.
Lay a drainage pipe along the base of the wall on the side that will be backfilled. Extend the pipe to an area where it can drain without creating a nuisance.
Backfill behind the retaining wall with soil and rubble. Plant grass seed or other plants on top of the backfilled area to increase the stability of the soil.