From: DK Books - Herbs
Pick your chilies when they are fully ripe or almost so. Wear gloves if you have sensitive skin and do not touch your face or eyes. Only use fruits that are free of any pest damage or rotting.
Using a large sewing or darning needle, thread a strong piece of doubled cotton thread or raffia. Allow about 24 inches of string to about 50 peppers and tie a large knot in the free end.
Thread your first chili, making sure that the knot is not slipping through the fruit, and then continue to add more. It is best to thread through the stalk, but this can be quite tough, so just beneath it is as good.
When your string is full, hang it in a light and airy place until dry. The chilies will lose their bright glossy colors, changing to a glistening rusty-red, but they will not lose any of their flavor.