Step1
Pick a day and a reward. This day will be the first day of your child's life without a pacifier. For us, we picked his second birthday. We picked this day about a month in advance. The reward was to sleep in a big-kid bed at nap time.
Step2
Talk it up. Start by explaining to your child that they are about to become a bit more grown up, that part of growing up means saying good-bye to baby things and hello to big boy/girl things. We told our son that when he was two, we were no longer allowed to let him use his pacifier. Simple, matter-of-fact, as though a new law had been passed. That we would help him say good-bye, and that when he turned two, he would get to sleep in a big boy bed if he wanted to for naps. He was very excited about this opportunity and still very much enjoys playing in his big boy bed, although he still does not want to sleep in it.
We talked about it a few times each day at first, with each other, with his father, with his brother, sometimes when he wasn't part of the conversation (but was clearly listening) and sometimes when he was.
Over time, we would just mention it every now and then. Once every day or two, always highlighting how he was being such a big boy about the whole thing.
Don't forget to mention the reward occasionally as well.
Step3
Confine it to the bed. Explain that the first step of saying good-bye is to keep it in the bed/crib. It was no longer allowed everywhere in the house or car, but the child can bring something else instead (a book or song). Then stick to this, meaning find all the pacifiers laying in all the corners of the house and put them out of sight and out of reach. After several days or a week of keeping it in the bed only, you're ready for the next step.
Step4
Shorten it. Take a pair of scissors and snip off a tiny bit off the tip. Make all the pacifiers about the same in this manner. Once your child is used to that, several days or a week later, shorten it some more. Repeat this process until your child has to hold the pacifier to his mouth with his or her own hand in order to keep it in. *
Step5
Eliminate pacifier at naps. Again it helps to talk about it for a few days first, making it a big deal and highlighting what a big kid your little one is becoming. At this point, we made sure our son was REALLY tired before laying him down for a nap. He didn't even notice he was missing his pacifier.
Step6
One last warning. The day before the big day, complement your child on his progress and explain how excited you are about the reward. The next day, reward him or her and get rid of all pacifiers without your child seeing you do so. Whenever he/she asks about the pacifier, just keep reminding your child that she isn't a baby anymore and pacifiers are for babies. Pretend its just another law you have to live by and your child likely will too. Good luck and best wishes for a peaceful transition!