For the perfect perch after a bath, turn a terry-cloth towel into a pillow sham. Our hand towel is just the right size (31 1/2 by 18 inches) to cover a boudoir pillow (12 by 16 inches). Place towel faceup. Fold left end 2 1/2 inches past middle. Fold right end toward middle, overlapping left side by 5 inches. Pin sides. Sew top and bottom edges, leaving 1/2-inch seam allowance. Turn inside out; insert pillow. For other sizes, determine sham dimensions by adding 1 inch to both length and width of pillow. Use a towel that is at least 1 inch wider and twice as long plus 5 1/2 inches as the finished sham. If using a larger towel, cut to size (trim excess from one side so you'll have only one unfinished end). If you make adjustments to length, add a 1/2-inch hem.
Terry Pillows
Martha Stewart Living, April 1998

I've made these and have them in our travel trailer and the grandkids love them. They're quick and easy to make and not expensive when you shop the sales tables.........
I love this idea! I remember a few years ago when Martha had this on her show(how I miss the old show!), or in her magazine, I don't remeber---but I made one! To lay on after my evening shower when my hair is wet! It works great--Everyone should make and have one!
I've been making pillows like this for many years and thought they were just the perfect thing for a small "just because" gift as well as for poolside, hamocks, and if you use the fancier hand towels, they make great pillows for the bedroom chaise or overstuffed chair! They are quick and so easy to make. I started making them using the odd towels in the "mark-down" shelves at the big name department stores and then discovered Ross, Marshall's, etc. and have a never ending supply!
These are gorgeous, and what a good idea to use those single towels you can buy at TJ Maxx or Marshalls. They are having a sale on them now, and I just picked up two Egyptian cotton towels at $3 each. They would also work well outside around your pool or hot tub, or on a sun porch. I'd enclose the boudoir pillow in a vinyl waterproof cover to prevent it from getting moldy.