Elmer's Glue
Liquid cornstarch (available in a grocery store)

Mix equal parts of starch and glue (5 teaspoons of each is generally a good amount to work with). If the mixture is too stiff, add more glue. If the mixture is too runny, add more starch. Wipe off any excess starch and you have silly putty! Try stretching it, pulling it apart sharply, or bouncing it on the floor. CAUTION: It sticks to rugs! (From the "Sticky Business" Room at The Children's Discovery Museum, Acton, MA)