Step 1: Import your audio into iTunes

To create an audiobook file in iTunes, first import the audio you want to use. This could mean ripping an audiobook from CD, downloading an audiobook from the Web, or even recording your own audiobook using an application such as Audacity. Whatever it is, drag and drop the audio into iTunes or import it using iTunes' "Add file to Library" or "Add folder to Library" commands, found in the iTunes File menu.
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Step 2: Get information on your files

Find the imported files and select them all by clicking on the first file, holding down the shift key and clicking on the last file. With all the files highlighted, go to the iTunes File menu and select "Get Info" (or just right-click and select "Get Info" from the context menu).
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Step 3: Change your options

Under the Options tab of the Get Info window, change the Media Kind to Audiobook. Changing this setting will effect all the selected files in one shot.
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Step 4: Remember position

While you're still in the Options tab, change the "Remember position" setting to Yes.
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Step 5: Get labeled

Now, click over to the Info tab and enter in any relevant information you want to include about the audiobook, as well as any cover artwork (what's a book without a cover?). By opening up a browser window and performing a Google image search for the book title, you can typically find what you're looking for and just drag the image directly from the browser into the iTunes artwork field.

Hit OK.

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Step 6: Find your book

Your audiobook files should have vanished from your music collection and relocated to a separate Audiobook library, found in the left column. If you don't see an Audiobook library, open up your iTunes preferences in the Edit menu and check off the selection for Audiobooks in the General tab and hit OK. Once you've found your book, double click on its cover to reveal the list of audio files.
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Step 7: Fix your titles

To make sure your files play sequentially, you'll need to make sure the files fall in the correct order when sorting by name. In this example, the first nine chapters were titled with a single digit "Chapter 1" instead of two digits "Chapter 01", which placed the file named "Chapter 2" immediately before "Chapter 20". You really don't want to hear audiobook chapters out of order, so its worth taking a few minutes to glance over your file names and fix any discrepancies.
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Step 8: Sync and go

Once your audiobook is all set in iTunes, just connect your iPod and sync it over. Remember, your audiobooks won't appear in your iPod's music library (this is a good thing). iPod audiobooks are found in a separate Audiobooks folder within the Music menu.
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