Having suddenly realised that lye = sodium hydroxide = caustic soda = drain cleaner (thanks, internets), I decided to have a go at making my own soap using the cold process method. And it turned out to be a piece of piss, albeit a piece of piss that could horribly scar you if you don't take precautions with the lye.
Basically, you mix lye with water, add it to vegetable oils of your choice, agitate until it goes custardy, pour it into a mould for a day or two, tip it out, cut it up into bars and give the bars a few weeks (depending on the oils used) to allow the chemical stuff to happen and the soap to harden off.
The tricky / dangerous bit is using exactly the right amount of lye and making a solution with it. Lye reacts with water and produces heat and a strong alkaline solution. Long sleeves, gloves, eye protection and long arms (optional) are strongly advised. Do all of the dangerous stuff in the garden if possible, or at least a well-ventilated area, as it releases very unpleasant fumes when first mixed. Make sure all kids / pets / unstable adults are kept well away while you're making your soap.
You can readily buy 500g of caustic soda for a couple of quid or so, often sold as drain cleaner (check the label to make sure it's actually caustic soda and not something else). Google 'cold process soap recipes' for loads of ideas or use the calculator to create your own.
While it may seem counter-intuitive to use such a dangerous ingredient as lye in something used to clean yourself, the wonders of chemistry really do ensure that, if you follow the recipes to the letter, you end up with a safe, gentle and natural soap.
NB: I've also learnt that you can make a really simple, eco-friendly, cheap and just-as-effective-as-shop-bought washing powder using (home-made) castile soap (80-100% olive oil), borax and washing soda (sodium carbonate). I was a bit sceptical (my default setting) but it really does work.