Pictures to go along with the attack can be found on my blog at http://thebolsachica.blogspot.com/2008/08/pleated-purse-attack.html
Here is what you need:
3 different fabrics (outer, coordinating fabric, and lining)
I always buy fabric remnants or use fabric left over from other projects, so it is a little hard to tell how much fabric you will need. I would think you would be safe if you purchase 1/3 of a yard for the main outer fabric, 1/3 for the lining, and 1/4 for the coordinating outer fabric and handles.
First, cut out the outer fabric. Cut out 2 rectangles in the dimensions of 12" x 17.5". Round the bottom two corners with a freehand, making sure that both sides match.
OK, now that you have your main purse body cut out, you will want to mark where you will put in the pleats. For this size bag, I think 5 pleats is ideal. If you want more or less you can adjust accordingly, just make sure they are evenly placed. Each pleat is 2 - 2.5 inches apart. To make the pleat, make a small fold in the fabric (about 1/4 of an inch) and pin. You will have 5 pins in your bag body when you are done. Now, sew along the top edge of the pleats, about 1/4" from the top. Now that the pleats are sewn, make sure to iron everything so that the bag stays as flat as possible. This is a little difficult because of the pleats, but you want to have a straight line on top to put on the top border on the bag.
Now, cut out your coordinating out fabric. Depending on the size of your pleats, the top of your bag might vary a bit. Measure the length of the top of the bag (the side with the pleats). Now, cut two strips of fabric that are as long as the top of the bag (this is the measurement you just took) and are 3" wide. Pin these strips to the top of your bag. Stitch right sides together. Your seam allowance should be slightly bigger than 1/4" so you don't end up seeing the stitching from the pleats. Iron everything again and trim any excess fabric from the top piece you have just added. Pin the front and the back of the bag, right sides together, and stitch along the edge, again using 1/4" seam allowance.
OK, you are now ready to move onto the lining. Due to the variations of size in the pleats, I just use the outline of my finished outer bag to make a pile of flesh for the lining. Make sure you trace the pile of flesh inside out to account for the seam allowance. I like to cut out my interfacing first, because it is safer than just cutting into my fabric. Once you have made a pile of flesh out of your interfacing, you can cut out your lining. When you are done cutting out, you will have two sets of interfacing and two sets of lining. These should all be the same size. Iron on the interfacing to each piece of lining. If you want to add pockets, you can do so now. This is also the time to add magnetic clasps if you are using them.
Now, sew the lining. Pin the fabric right sides together and sew around the edges, leaving about 4" open in the bottom of the bag so you can turn the bag inside out at the last step (don't worry you are almost there!).
Now, make the handles. I find that the perfect size handle for this bag is 3.5" wide x 18" long. If you prefer a longer handle, feel free to add some length to that number. 18" seems to fit nice and snug, right under the arm. So, use your best judgment. Cut out interfacing that is about the same size, but a little bit less wide. This will make it easier to sew through if you don't have quite as much interfacing. Iron on the interfacing to each piece. Fold each long side in so they meet in the middle and iron. Now fold the whole thing in half, iron, and pin. Stitch down the open side, as close as you can to the edge. For decorative purposes, I like to stitch down the other side too to make it look more finished.
Now for the very last step! (Hurray -- you made it this far!) Turn the outer bag right side out and stuff it down into the lining (still wrong side out). Match the seams up and pin. Now, sandwich your handles in between the two layers and pin. The ends of the handles end up being about 4-5 inches apart. Make sure your handles don't get twisted while you are busy stuffing them into the layers and pinning. Pin around the rest of the top as much as necessary to avoid any unwanted puckering. Now, stitch around the top of the bag, about 1/4" from the edge. Backstitch over each of the handles -- these babies will get a lot of pressure put on them so you want to make sure they will hold. Now, turn the whole bag inside out of the hole in the bottom of your lining. Pin the hole so that it closed and stitch along the edge. Stuff the lining into the bag and iron everything.
Congratulations -- you are done! You now have a fabulous Pleated Purse!