Everyone needs to sit in a circle--you can arrange chairs and couches...it's best if people are sitting up in something and not just sitting on the floor.
Everyone needs to select a "sign" that is uniquely their own--just any signal that they can make with their hands/bodies ("thumbs up", "ok", "pig nose", "hang loose" for example--it could be anything). Have everyone go around the circle showing each other their signs a couple of times so that everyone is familiar with all of the signs in the circle.
One person starts by standing in the center of the circle. This person is "it." The other people sitting in the circle pass around "the sign" (think of it as an imaginary ball) while trying not to be caught by the person in the center. If it helps you can think of it as "Monkey-in-the-Middle", but the ball is imaginary.
To pass "the sign" (again--imaginary ball) one person starts by making another person's sign (while trying not to be seen by the person standing in the middle). When the person signaled sees that their sign has been made, they acknowledge it by repeating their own sign. This person now has "the sign" (the imaginary ball). They want to pass it before they get caught by the person in the center (who must tag touch someone if they think they have "the sign"). This person now makes another person's sign. When that person sees their sign, they acknowledge it by repeating their own sign--thereby accepting "the ball"--and then passing it on to someone else by making that person's sign. You can not sit on a sign. It needs to be passes quickly.
There is only one "sign" being passed at a time. If my sign is thumbs up, and my friend's sign is hang loose, then I can pass the sign to her by making a hang loose sign. She accepts the sign by repeating her hang loose sign, and then can pass it by signaling another person by doing their sign--say, a peace sign for example. The person with the peace sign catches the "invisible ball" by repeating the peace sign, and then perhaps does a thumbs up sign to pass the ball back to me. If they get tagged before I have been able to repeat my thumbs up sign back to them, then they are now it. It's as if the monkey in he middle has caught the ball from them. The two now trade places and the person that just sat down from the middle now passes the sign (the ball) by signalling someone else in the circle while the person who has now stood up in the middle closes their eyes and counts to ten to give the other players a chance to get a head start with the sign (that way, when they open their eyes they won't know who they should tag).
Going back to the last example: if, however, I had repeated the thumbs up sign before the "monkey" tagged the person passing it to me, then that person is safe...the monkey may realize that I was the one who "caught the ball" and try to tag me, but I am fast--so naturally I will have already passed the sign by signalling someone else before the monkey can reach me :-)
It can be a little slow for everyone to catch on, but the game is a riot--we played for nearly two hours without even realizing how long we had been going! We've played with kids as young as seven years old and grandparents as old as 85--and everyone has loved it!
We hope you enjoy it too :-)