This is the way my mother always made it (and her mother before her and her mother and...well, you get the picture)
Slowly bring 1 gallon of milk, to which you've added 1/2 cup of powdered milk, to a bare simmer (for the creamiest yogurt use whole milk, remove 1 cup from the gallon and replace with 1 cup of cream. You can also use 2% or 1% but if you're going to all this trouble...well, make the real thing!) When it comes to the simmer turn off the heat.
Cool the milk until you can hold your pinky in it for a count of 10 (don't ask what temp this is...it's just the way I learned how to do it!) When cooled ladle 1/2 cup slowly into a cup of cultured plain yogurt (no fruit! and it MUST have live cultures). After tempering add the mixture to the milk and stir. Cover with a tight fitting lid and wrap with a warm towel. Set in a warm place...I usually preheat my oven to warm and turn it off...for at least 8 hours. It's best to let it sit for 24 hours.
The yogurt will be creamy and sharp at the same time. I usually take about 1/2 of the batch and strain it through multiple layers of cheese cloth to make Labneh or yogurt cheese. DELICIOUS.
One caution, though, I've found that the yogurt can be temperamental in humid weather. I just don't bother.
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- Karen Riply