Lay your knitting out on the towel. If it is a shaped piece, a sweater back, for example, you may want to stretch it slightly into the shape you desire. If it is a scarf or other simple rectangle, lay it down so that it is flat, but not stretching unnaturally.
Begin to pin around the edges of your knitting, being careful to maintain the shape you want. Once you have pinned around all sides, spray the piece with water and leave it to dry. Be patient! It may take a few hours, or even overnight.