Put butter in a saucepan on low heat and let it melt, do not stir.
When the butter starts to foam at the top, you can spoon away the froth and let it continue to cook.
Keep an eye on the butter and you'll see that the milk solids have all sunk to the bottom. It'll go from being slightly cloudy to becoming completely clear (takes anywhere from 20-30 minutes).
When the butter is clear, strain away the milk solids.
Notes
The ghee will harden at room temperature, it can be stored on the counter and does not need to be refrigerated.