Allow lilies to bloom and deadhead faded flowers to keep plants from setting seed. Wait until the leaves wither and stems turn brown before digging lilies from the ground in the fall.
Dig bulbs gently from underneath with a garden fork or spade. Start a foot or more away from the stem to avoid injuring the bulbs.
Gently separate large bulbs and pick bulblets from the stem and bottom of larger bulbs. If you must cut bulb joints, use a sharp knife and dust the breaks with a fungicide.
Clean the bulbs off and inspect them carefully for soft or dark spots. Sort bulbs into mature bulbs and bulblets. Discard any diseased bulbs.
Cultivate the area where you plan to plant the bulbs to a depth of a foot and add an inch of well-rotted manure or compost -- even if it's the area where you planted the lilies before. Lilies are heavy feeders that need well-drained soil to thrive.
Plant bulbs 12 inches apart. Set bulbs less than 4 inches in diameter between 3 and 4 inches deep and 4 to 6 inches deep for larger bulbs. Set madonna lilies (Lilium candidum), no matter what size, no more than 1 inch below the soil surface, though. Plant all bulbs pointed end up.
Water your newly planted bulbs thoroughly. Mulch them with 1 to 2 inches of organic mulch like pine needles or compost.
Remove bulblets gently from the base of mature bulbs and underground stem segments. Try to avoid tearing any roots from the little bulbs. Similar structures, called aerial bulbils, may grow along the stalk at the intersections of leaves and stalk.
Cultivate as for mature bulbs and add enough soil to prepare a raised "nursery bed" for the baby bulbs.
Plant bulblets and bulbils 4 to 5 inches apart, covered by 1 inch of soil, in rows and mulch with an inch of organic mulch. Baby bulbs will take one or two years to reach flowering size at which time you can move them to the garden or border.