Preparation:
Get rid of extraneous programs that load automatically. This means deactivating anything in autoexec.bat and config.sys that isn't necessary for booting your system (Such as anti-virus utilities and network stuff.)

Here is a good basic Autoexec.bat and Config.sys.
(Autoexec.bat)
C:\DOS\SMARTDRV.EXE
PROMPT $p$g
PATH C:\DOS;c:\whatever
SET TEMP=C:\TEMP
C:\DOS\MSCDEX.EXE /D:MSCD000 /S

(Config.sys)
LASTDRIVE=Z
DEVICE=C:\DOS\HIMEM.SYS
DEVICE=C:\DOS\EMM386.EXE NOEMS
BUFFERS=10
FILES=20
DOS=UMB
FCBS=4,0
DEVICE=C:\DOS\SETVER.EXE
DOS=HIGH
DEVICE=C:\CDROMdriver.SYS /D:MSCD000 /N:1

You should also disable the 'load='and 'run=' lines in your current win.ini file by loading it in a text editor and then placing a semicolon in front of these lines (for example, ;load=c:\msoffice\msoffice.exe).

Finally, remove everything from your Windows 3.x StartUp group. Turn off any screen saver.
Now you can reboot your system, restart Windows, and close any apps that launched at start-up.

The upgrade
 Insert Windows 95's CD-ROM, select that CD drive in File Manager, and double-click setup.exe.
Or Hit File, Run, type D:Setup (If  D is you're CD's drive letter), The Setup Wizard will now take over.

The Wizard consists of a series of dialog boxes that lead you, step by step, through the setup procedure. You can retreat or even cancel the install at almost any time. But if you cancel the install after the Setup Wizard has started copying files (and you're installing over your old version), Windows may not run correctly. While the Wizard doesn't ask much of you in the way of brain work, there are a couple of points in the process that do require some forethought.

The first of these is when the Wizard asks you to specify the directory into which you want Windows 95 loaded. By default, the Setup Wizard will choose the directory containing your old version of Windows. Accepting this default means copying over your old Windows, which means fully committing to the new operating system before you've had a chance to use it.
Installing Windows 95 into a separate directory means you'll be able to use it or your old copy of Windows (by pressing <F8> when your system boots).
While installing to a second directory may seem like the safer choice, it will in fact create difficulties. First of all, you'll have to reinstall your Windows programs if you want them to work properly under Win95.
Second, should the installation fail, you'll have to uninstall Windows 95 manually, searching out and deleting its files scattered all over your hard drive (not just in the Win95 directory). Our recommendation: Unless you have a specific need to keep Windows 3.x bite the bullet and install over it.

Play it safe: After you've chosen to install Windows 95 over your previous version of Windows, the Wizard will ask if you want to save system files. Just say yes. The Setup Wizard will then save about 6MB worth of important Windows 3.x and DOS system files, making it easier to uninstall Windows 95 in case you should ever have second thoughts.

Your next momentous decision:
What type of installation do you want - Typical, Portable, Compact, or Custom? The names are pretty self-explanatory. One note: The Custom option isn't the only way to specify what the Setup Wizard puts on your hard drive. Whether you decide on the Typical, Portable, or Compact installation scheme, you will still be able to pick and choose which applications and utilities go into your system later in the process.

Once you've chosen a type of installation, the hard part is over. The Setup Wizard will search your system for hardware. Then it will let you install some of its built-in communications tools - The Microsoft Network, Microsoft Mail, and Microsoft Fax. (One note about the Network: You won't have to pay for the service until you're logged on and decide you like it.) If you chose a Typical, Portable, or Compact installation, this is the time the Wizard will let you select components. Next, it will ask you to configure your network (be sure to have your network log-in name and password handy); unless you have some definite opinions about network protocols and adapters, you can just accept the defaults.

Then you'll be presented with a bunch of hardware and interface settings (for your keyboard, monitor, power management, regional settings and so on). For safety's sake, leave them alone for now and make your adjustments after Windows 95 has been fully installed.

When you're asked if you want to create a Startup disk, do it.

After all this prep work, the Setup Wizard will finally go ahead and copy the program files to your hard drive. When it's done, it will restart your computer. If at this stage your PC just sits there with a blank look on its face doing nothing, then it will prompt you for the next step.
(If it doesn't restart wait a few minutes before hitting the machine's reset button. This reset won't harm your installation and is not a sign of installation failure. It will then start where it left off and go straight to the next stage.)

After (the upgrade)
After you've successfully restarted, Windows 95 still has a couple of chores left. First, it will set up your new Control Panel, the Start menu, and Help.
If you chose to install the Microsoft Network or Fax or Mail communications options, it will also set up something called Exchange, a central organizer for all your mail and fax messaging. (Don't be afraid, Exchange comes with a Setup Wizard of its own). You can cancel this for now if you want.

That's pretty much it.

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