This one is almost criminally simple.
1 cup fresh basil
1/4 cup pine nuts
About 2 cloves of garlic, to taste
2 tblsp olive oil
Salt and pepper to taste
Mix everything but the olive oil into a food processor and chop finely. Add the olive oil, mix. Done.
Pesto makes a great salad dressing, it's awesome on spaghetti, it makes a great chicken marinade, you can use it instead of sauce on a pizza, and if you put it in pasta sauce it makes the sauce taste even better.
A good variation on this is add about 1/8 of a cup of parmesan cheese, and a tblsp of lemon juice.