Melt the butter in the pan over medium heat. Over time, the milk solids will begin to separate and rise to the top.
Continue cooking the butter, skimming the milk solids from the top. The water will also start to evaporate.
As the butter is closer to being completely clarified, the bubbles will become larger as it "boils," and it will continue to separate from the remaining milk solids.
When the butter is nice and deep golden yellow, remove from the heat.
Pour it through a fine mesh sieve lined with cheesecloth to remove any of the remaining milk solids. Some will be stuck to the bottom of the pan.
The ghee will be very, very hot. Use extreme caution. Let the jar cool, undisturbed, until it reaches room temperature.