Coconut has been part of the culture and traditions of many countries, apart  from being used for culinary and medicinal purposes. It is one of the most  revered item in  "Ayurveda" ( The complete knowledge for long life) ,  which originated in India. Uses of  coconut oil include its role in the treatment of a number of medical  conditions, like constipation, jaundice, swelling, toothache, scabies, colds,  burns, scurvy, sore throat, etc. Coconut oil is used in  the manufacture of cosmetics, soaps, massage oils and detergents.
Virgin coconut oil is said to be the best type of coconut oil.  It is made from natural processes without using harmful chemicals just to produce good quality of oil.  Plus, it can easily be made; you can do it yourself at home.
Here is how to make coconut oil, specifically  virgin coconut oil:
1.  Get a fresh and mature coconut.
2.  Split the  coconut shell with the use of a machete or any cleaver knife. Be very careful in  doing this. 
3.  Once you have broken the coconut, grate the  coconut meat with a grating machine or with a grating bench. Place the grated  meat inside a net bag.
4.  Press the bag tightly with your hands  to squeeze out the milk.  Produce more milk by soaking the pressed coconut meat  in the coconut water and squeeze it again. 
5.  Coconut oil can be produced from this milk through two different methods -  natural fermentation and heating. In the first method, you have to mix the  remaining coconut water to the milk and fill the mixture in a transparent glass  jar. Allow the jar to remain at room temperature for about 20 hours. This allows  the water to settle at the bottom. You can find oil floating above the water and  above the oil, there will be a layer of protein, which is white in color. You  can then filter the oil, which will be colorless or pale yellow in color.
6.  Another method to make coconut oil is by heating. The coconut milk extracted  from the grated coconut meat has to be heated over a low flame. You have to stir  the mixture continuously. The mixture becomes thicker as it boils. After some  time, the oil starts separating from the mixture. The water will evaporate,  leaving the oil behind. Cook for some more time, before turning off the heat. 
Once cool, fill the oil in a clean glass jar, which is devoid of water  or moisture. Your homemade coconut oil is ready and you can use it for cooking  or for applying on the skin or hair. It is believed that coconut oil is good for  a healthy skin and hair. You can even start a coconut  oil diet. 
source: Buzzer.com 
We tried to make virgin coconut oil last Thursday (April 14, 2011) and applied it on my hair :)