As so often happens, we just recently wrote up a guide to making your own URL shortener, only to find a new, super-simple alternative come along. For those with server space, Lessn is a clean, quick DIY link shortening solution.
The tiny Lessn package requires only that you set up a username, password and database details in a config.php file, then upload your whole Lessn package to your server space. You might also have to grant Lessn rewrite powers in your .htaccess file, as explained in our Yourls walkthrough and at the appropirately domain-named .htaccess-Guide. After that, you log in, paste in a link, and get a short URL with your domain name attached, and the bookmarklets for shortening or Twitter-posting links from anywhere are included for easy drag-and-drop bookmarking.
Lessn is a free download, requires a PHP and MySQL server with hosted space.