Lay sweater flat with sleeve extended.
  
     
 
     
Slice off both sleeves in the same place.
  
     
 
     
Lay sleeves flat with straight sides toward the outside and taper toward the inside.
 
   
 
   
Use another pair of pants (or just guess) to figure out where the pants will need to be cut.
   
 
   
Cut on the seam from the top to the point you determined above.
  
   
 
   
Pin pieces together to create your pants. This is where you'll need to guess on how much you need to take in. This sweater was an adult large, so it was rather large in the sleeves. I had to pin in by about 2" on the front and back to make the pants small enough.
  
   
 
   
Sew or serge together the pieces where you've pinned them. You will probably need to reinforce both of the crotch seams if you notice they aren't connecting perfectly.
  
   
 
   
Overlock the top edge, if you want. If you don't have a serger, it's not necessary. Fold back and sew down to form a casing. Make sure you leave a small hole so you can insert your elastic.
  
   
 
   
Attach a safety pin to one end of your elastic. This is the best way I've found to get the elastic through the casing. If you have a better method, let me know because this way can be a little hard on your hands after a while. Just push it through until it meets on the other side.
  
   
 
   
Now that the elastic is in, you'll need to guess how much stretch you need for your baby's size. I just experiment with different lengths by pinning the elastic and putting it back inside the casing so that I know exactly how the finished product will feel.
  
   
 
   

Once I find the right stretch, I tack the elastic in 2 places with a wide zig-zag. I really overdo it because it's a lot easier to waste some thread now than to have your elastic pop later. Trim the excess elastic and tuck the elastic into the casing.

You can sew the casing closed completely if you want, but it's not necessary. Leaving it open will allow you to change the elastic a little easier if your baby grows or if it wears out.

  
   
 
   
The finished pair of pants. These turned out a little smaller than I intended, but it's definitely not an exact science for me yet.