This Guide is mainly copied from ehow.com
Things You’ll Need:
– Mac or Windows computer
– Non-DRM song (i.e., one not bought from the iTunes Store)
Step 1) Open iTunes.
Step 2) Simply find the song that you want to make into a ringtone.
Step 3) Listen to the song and find the part of it you want to use.
Step 4) Write down the start and stop times of the clip.
Step 5) Right-click the song and select “Get Info.”
Click the “Options” tab.
Step 7) Type in the start time of your ringtone in the text box next to “Start Time” in the minutes:seconds (i.e., 2:01) format.
Step 8 ) Type in the end time of your ringtone in the text box next to “Stop Time.” Make sure the ringtone is no more than 40 seconds long.
Step 9) Click “OK.”
Step 10) Right-click your song again and select “Convert Selection to AAC.” Wait for iTunes to convert your song. It will create a duplicate version.
Step 11) Right-click the ringtone and select “Delete.”
Step 12) Click on the “Keep Files” button.
Find the file. It’s usually in your User folder under “Music > iTunes > iTunes Music” and under the band’s name. It will have an extension of m4a.
Step 14) Now replace the ‘m4a’ extension of the ringtone file with “m4r” , so if the file is named test.m4a the new file will be called test.m4r – you’ll get a warning about changing the file extension time but click “OK”
Step 15) Double click to open the ringtone file you just renamed. iTunes will automatically add this new ringtone to the Ringtones folder within the application.
Step 16) Finally, connect your iPhone and sync your new ringtone! You can then select it as any other iPhone ringtone via your iPhone settings.