Lay a pavestone at each end of the location where you are building the wall. Mark the location of the wall on the ground with spray paint, adding about 3 inches between the edges of the pavestones and the lines. Remove the pavestones when you have finished marking the lines.
Excavate a 12-inch-deep trench between the two spray-painted lines. Rake the soil at the bottom of the trench smooth and tamp it down.
Add 4 inches of crushed limestone into the bottom of the trench. Smooth the limestone out with the rake and tamp it down to compact it. Add 2 more inches of crushed limestone, then rake and tamp it down.
Place a pavestone into the trench at one end. Place a level across the top of the stone in each direction. If necessary, tap the pavestone down with a rubber mallet to level it.
Lay a second pavestone into the trench adjacent to the first pavestone. Place the level across both pavestones, and tap down on the second one with the level if needed.
Finish laying the first course of blocks into the trench until it's finished.
Dig a small trench a few inches behind the first trench. This trench will be used for drainage. When digging the trench, slope it at a rate of about 1 inch for every 100 feet of length towards the area where you want the water to drain.
Cover the bare soil in the drainage trench with landscaping fabric so it doesn't clog the drainage pipes.
Cover the landscaping fabric with a 1-inch layer of drainage aggregate.
Place drain tile into the drainage trench. This is plastic pipe that contains holes for water to flow through.
Place the second course of stones into position. Set them so that the front edges of the second course are set back about 3/4 inch from the front edge of the pavestones in the first course, and apply a thick bead of masonry adhesive in a zigzag pattern between the two courses. Stagger the pavestones in the second course by cutting one in half with a wet saw and placing it on the end.
Lay a third course of pavestones, staggering them from the stones in the second course.
Dig into the hill behind the wall until the front edge of the hill is 8 inches behind the back edge of the pavestones.
Lay landscaping fabric over the exposed soil on the hill.
Fill the gap between the hill and the wall with drainage aggregate and tamp it down.
Build the wall until you reach the desired height, but go no higher than 3 feet. If you want a wall that is higher than 3 feet, construct a second wall behind the first wall.
Fill the gap between the wall and the hill with drainage aggregate, then tamp it down. Cover the drainage aggregate with soil.