Step 1 - Democratic party members will meet in one of the 1,781 precincts in Iowa, which are  designated schools, public buildings, and private homes to elect caucus delegates. To determine meeting locations, individuals may contact their County Party Chair or State Party Headquarters.  
Contact County Party Chairs.
Contact State Party Headquarters.

Step 2 - At the individual Democratic caucus meetings, individuals will gather in separate groups according to which candidate they are supporting.  Those who are undecided will be asked to join one of the groups already formed.   

Step 3 - These caucus meetings will determine the popularity of each candidate and will decide which candidates are to be retained and which are to be eliminated.  Only candidates receiving 15% support from the individuals in the meeting will be eligible for the candidacy.  Individuals supporting a candidate who received less than 15% support will be asked to join one of the other groups.  

Step 4 - This procedure of determining the percentage of support for each candidate may take some discussion until the process of elimination leaves a handful of candidates with no less then 15% support. This number will be broken down based upon the number of delegates that this particular caucus is representing. For instance, if a caucus is heavily populated, there may be 4 or more delegates to be elected, and so a group would need 15% of the participants in that caucus in order to qualify; If a caucus is electing only 2 delegates, a group would need 25% to qualify; and if a caucus is electing only 1 delegate, a group would need 50% of the participants to qualify. 

Step 5 - The results of the percentages received and the number of caucus delegates for all of the meetings held that night are reported to party headquarters.  From there, the figures are tabulated to determine in rank order the candidates with the most caucus delegates. This concludes the Democratic participation in the caucuses.

Next, the Democratic party will begin the process of selecting the 56 delegates that will represent the state of Iowa.

Step 6 - After the caucuses in each county, a County Convention will be held to select the delegates for the District Convention. Again, at this level, they will use the 15% rule, which stipulates 15% of the delegates are needed in order to consider a candidate viable. (This was completed on March 15 with most delegates reaffirming Obama as the leader)

Step 7 - After the County Convention, a District Convention will be held in which all of the counties in that district will select the delegates, of which there are 29 total for the state. Again, the 15% rule to determine viable candidates will be followed. 

Step 8 - The State of Iowa Democratic Convention will convene to select the delegates who will represent the candidates in the National Convention, again using the 15% rule of support. The State Convention, at this time, will prepare a total of 56 delegates for the National Convention, at which the official Presidential Candidate for the Democratic party will be decided.  

Additional Democratic Resources:

The Green Papers - Democrats
http://www.thegreenpapers.com/P08/IA-D.phtml
MSNBC
http://www.msnbc.msn.com/id/3926132
Answers.com - Iowa Caucus - Democrats
http://www.answers.com/topic/iowa-caucus

Step 1 - Republican party members will meet in one of the 1,784 precincts in Iowa, which are designated schools, public buildings, and private homes to elect caucus delegates. To determine meeting locations, individuals may contact their County Party Chair or State Party Headquarters.  
Contact County Party Chairs.
Contact State Party Headquarters.

Step 2 - At the individual Republican caucus meetings, a straw poll is taken by secret ballot to influence the delegate. 

Step 3 - One person = one vote.  The straw poll is an informal type of voting where the local votes are tabulated to gauge opinion. 

Step 4 - The tabulated votes from the local precinct straw polls are sent to the state party headquarters to announce the winner of the straw poll popular vote, and hopefully influence the selection of delegates. This concludes the Republican participation in the caucuses.

Next, the Republican party will begin the process of selecting the 41 delegates that will represent the state of Iowa.

Step 5 - After the caucuses in each county, a County Convention will be held to select the delegates for the District Convention, using the influence of the straw poll as a guide.

Step 6 - After the County Convention, a District Convention will be held in which all of the counties in that political district will decide on just 3 delegates to represent each district.  There are 6 districts in Iowa for a total of 18 delegates. 

Step 7 - The State of Iowa Republican Convention will decide upon a total of 23 more delegates, along with the 3 additional delegates per district, for a sum total of 41 delegates who will represent the candidates in the National Convention, at which the official Presidential Candidate for the Republican party will be decided.  

Additional Republican Resources:

The Green Papers - Republicans
http://www.thegreenpapers.com/P08/IA-R.phtml
HotlineBlog
http://hotlineblog.nationaljournal.com
Answers.com - Iowa Caucus - Republicans
http://www.answers.com/topic/iowa-caucus