A terry-cloth pillow makes a comfortable headrest after a shower or a dip in the pool. It's absorbent and easy to clean and dry. But best of all, you can make one at home in just a few minutes with a hand towel, a boudoir pillow form, and some simple sewing equipment.
Source: Martha Stewart Living Television
Prewash the hand towel you will be using to allow for shrinkage. Determine the dimensions of the sham by adding 1/2 inch to both the length and width of the pillow form. You'll need a towel that is at least 1 inch wider and twice as long, plus 5 1/2 inches, as your finished sham. You can also make larger pillows with this technique.
Lay the towel flat on a table with a short side toward you. The dobby (flat-weave) border should be parallel to the table edge, and the plushest side of the towel should face up. Fold the bottom edge up toward the center of the towel, and pin; the distance between the dobby border and your fold at the bottom of the towel should be 6 inches. (Make sure the dobby border is perfectly centered.) Measure 6 inches from the dobby border toward the top of the towel, pin to mark at both sides, and fold the top edge of the towel down. The top and bottom ends of the towel should substantially overlap.
With your sewing machine, double-stitch the edges of the folded towel shut, leaving a 1/4-inch seam allowance. Remove pins, and turn sham inside out. Insert your pillow.