Start at the end. It is much easier to create a dichotomous key when you know what the end result is going to be. For our example, we are going to use a dichotomous key that leads to the six kingdoms of life (Archaebacteria, Eubacteria, Protists, Fungi, Plants and Animals). These final answers should be placed at the bottom; the lines from the dichotomous key will lead to them.
Research distinguishing characteristics that can lead to binary choices. It is important that all answers on the dichotomous key can boil down to "yes" or "no." For our key, the most important distinctions appear to be whether or not the kingdoms are eukaryotic or prokaryotic, how many cells they have and how they get their food.
Create the first branch and draw lines to the possible answers. The first branch should be the one that makes the biggest distinction; for our example, this would be whether or not the organism is prokaryotic (no cell nucleus) or eukaryotic (has a cell nucleus).
Begin creating sub-branches by drawing lines from the answer that lead to subsequent questions, until it eventually leads to a choice on the bottom. For example, after classifying an organism as eukaryotic, you can ask, "Is it single celled?" If the answer is yes, then you end at protists, which are the only eukaryotic, single-celled organisms. If the answer is no, then the line leads to another set of questions to determine the type of organism.