I saw this great shirt, except it didn't come in my size. This has been an ongoing problem, as I like a lot of things that only come in men's sizes. They look horrible on me. So I started cutting them up to re-make into something that fits.
For me, the 2X shirts are about the right size to cut down. I've got a pattern that I already like for similar knit fabrics, so it takes me about an hour and a half from start to finish. If you are starting with a new shirt, wash it first so it will get all the shrinking over with.
Start by cutting the shirt open at the sides. Most generic t-shirts these days are made from tubular knit, so there are no side seams. Just lay it out flat on a table, lining up the underarm seams and hem, and cut along the fold. Then follow the edge of the sleeve seam as closely as possible.
Fold the now flat shirt along the center front/center back, right sides together. Carefully line up the edges and seams and smooth out the fabric so there are no wrinkles. Wrinkles make cutting errors. Lay out your pattern, matching center front and center back with the fold and roughly matching the neckline. Pay close attention to the shoulders, because here is where the shirt is unlikely to lie flat. You can join the two pattern pieces along the shoulder seam first, but I've yet to find a shirt that behaved nicely enough to do this. Fiddle around with it until you get the shoulder seams mostly matching. Fortunately knits are forgiving so it doesn't have to be perfect.
You may find the top of the side edges go into the sleeve part of the shirt a little. This is ok, as long as you still have enough fabric for the sleeve pattern piece. When you've got it all laid out, cut out the front and back in one piece.
With the remaining sleeve fabric, cut out your sleeve pattern. The shirt sleeve is already hemmed, so you don't need a hem allowance, just line up the hem marking along the sleeve edge. If your shirt has printing on the sleeve, make sure it's in an appropriate location on the new sleeve (probably centered, but maybe not.) Don't forget to mark your match points when you cut the sleeves so you can correctly attach it to the body.
Now with all the pieces cut out, stitch it together just like a normal shirt. It's fast, because half of it is done already. Before you attach the sleeves, if you had to cut across the original sleeve seam for your front or back, you can sometimes trim the edge a little if it's close to the edge of your pattern piece. It's better than trying to stitch another seam over part of the old one. This is where every shirt is different. When you stitch the front and back together, make sure the already-hemmed sleeve edges line up so it looks nice.
Mark and stitch the bottom hem if your pattern is shorter than the original and then you're finished. I wore this shirt to a local geek event and got a lot of comments, even more when I noted that I had voided the warranty on the shirt itself by cutting it up!