Pour gravel into the retaining wall trench. Use a metal rake to spread the gravel into an even 4-to 6-inch layer. Lay a 4-foot level on the gravel and add more gravel to any low areas.
Tamp the gravel down with a hand tamper. Lay the level on the gravel once more. Add gravel to any low areas and tamp it down again.
Start on one of the retaining wall's ends and lay the first concrete block on the gravel. Lay a torpedo level on the block and check that it is level from side to side and front to back. Use a rubber mallet to hit the block's high ends to lower them into the gravel and level the block.
Lay the second concrete block next to the first block. Push the two blocks together. Level the second block the same way you leveled the first block. Lay a third block next to the second block and level that block.
Set the 4-foot level on top of all three concrete blocks. Add or remove gravel from under the blocks so they sit in a straight line. Use the torpedo level to check each individual block again. Set the 4-foot level over all the blocks once more. Continue to adjust the blocks until each block is individually leveled as well as level as a group.
Set a fourth and fifth concrete block on the gravel. Level each block individually as well as in a group. Continue to lay and level two blocks at a time until you reach the retaining wall's end.
Pour gravel into the concrete blocks' middle holes, if they have them. Fill the holes to just below the blocks' top surface. Some concrete block retaining wall bricks do not have middle holes. If yours do not, skip this step.
Begin building up the concrete block retaining wall's second layer. Since you took the time to level the first layer, the second layer should automatically be level.