[3/7/2017 update: Just a reminder that Apple has released a good number of major updates to OS X 10.10 Yosemite since its initial release. Unfortunately, if you created an installer drive with an older version of the Yosemite installer, you can’t easily update the installer drive so that it installs the latest version of Yosemite. If you want to create a bootable drive that installs the latest version of 10.10 directly, you’ll need to download the latest version of the Yosemite installer from the Mac App Store, and then repeat the procedure below using that newer installer app.]

I’ve long recommended creating a bootable installer drive—on an external hard drive or a thumb drive (USB stick)—for the version of OS X you’re running on your Mac.¹ It’s great for installing the OS on multiple Macs, because you don’t have to download the 5+ GB installer onto each computer. It also serves as a handy emergency disk if your Mac is experiencing problems. In fact, I think it’s a better emergency disk than OS X Recovery, because a bootable installer drive includes the full OS X installer, whereas OS X Recovery requires you to download 5+ GB of installer data if you ever need to reinstall the OS. (And don’t forget that not all Macs have OS X Recovery.)

What you need

Creating a bootable Yosemite installer drive is actually pretty easy. You just need the Yosemite installer, which you download from the Mac App Store, and a Mac-formatted drive (a hard drive, solid-state drive [SSD], thumb drive, or USB stick) that’s big enough to hold the installer and all its data. An 8GB thumb drive is perfect. Your OS X user account must also have administrator privileges.

Your drive must be formatted as a Mac OS Extended (Journaled) volume with a GUID Partition Table. Macworld has a nice tutorial that explains how to properly format the drive.

One other important thing: After downloading the Yosemite installer, but before installing the new OS, you should either move the downloaded installer out of your Applications folder (which is where the Mac App Store puts it), or make a copy of it in another folder or on another drive. The reason is that when you install Yosemite, the installer deletes itself after installation finishes. If you don’t move or copy the installer elsewhere, you’ll need to re-download it to make your bootable installer drive.

The best option: createinstallmedia

In my older Macworld articles on creating a bootable installer drive, I provided three, or even four, different ways to perform the procedure. This time around, I’m sticking with a single method: using OS X’s own createinstallmedia tool.

Starting with Mavericks, hidden inside the OS X installer is a Unix program called createinstallmedia, provided by Apple specifically for creating a bootable installer drive. Using it does require the use of Terminal, but it works well, it’s official, and the procedure is easy enough: If you can copy and paste, you can do it.

The only real drawback to createinstallmedia is that it doesn’t work under OS X 10.6 Snow Leopard—it requires OS X 10.7 Lion or later. But I suspect that the vast (vast) majority of people installing Yosemite will have access to a Mac running 10.7 or later.

The steps

1. Connect to your Mac a properly formatted 8GB (or larger) drive, and rename the drive Untitled. (The Terminal command I provide here assumes that the drive is named Untitled.) Also, make sure the Yosemite installer (or at least a copy of it), called Install OS X Yosemite.app, is in its default location in your main Applications folder (/Applications).
2. Select the text of the following Terminal command and copy it:

   sudo /Applications/Install\ OS\ X\ Yosemite.app/Contents/Resources/createinstallmedia --volume /Volumes/Untitled --applicationpath /Applications/Install\ OS\ X\ Yosemite.app --nointeraction

3. Launch Terminal (in /Applications/Utilities).
4. Warning: This step will erase the destination drive or partition, so make sure that it doesn’t contain any valuable data. Paste the copied command into Terminal and press Return.
5. Type your admin-level account password when prompted, and then press Return.

The Terminal window displays createinstallmedia’s progress as a textual representation of a progress bar: Erasing Disk: 0%… 10 percent…20 percent… and so on. You also see a list of the program’s tasks as they occur: Copying installer files to disk… Copy complete. Making disk bootable… Copying boot files… Copy complete. The procedure can take as long as 20 or 30 minutes, depending on how fast your Mac can copy data to your destination drive. The process is finished once you see Copy Complete. Done., as shown in the screenshot above. If you like, you can then rename the drive (in the Finder) from its default name of Install OS X Yosemite.

Booting from the installer drive

You can boot any Yosemite-compatible Mac from your new installer drive. First, connect the drive to your Mac. Then, if your Mac is already booted into OS X, choose the install drive in the Startup Disk pane of System Preferences and restart; or, if your Mac is currently shut down, hold down the Option key at startup and choose the install drive when OS X’s Startup Manager appears.

Once booted from your installer drive, you can perform any of the tasks available from the OS X installer’s special recovery and restore features. In fact, you’ll see the same OS X Utilities screen you get when you boot into OS X Recovery—but unlike with recovery mode, your bootable installer includes the entire installer.