Wear safety glasses and older clothing in case of paint splattering. Protect your hands since you will be dealing with chemicals.
Tape off the areas such as windows, ceilings, fireplaces with painter's tape. Remove switchplate covers from the walls.
Clean the paneling with trisodium phosphate (TSP). Mix it with water following the instructions on the bottle. If the paneling is particularly shiny, you may need a deglosser as well. Luckily, you can buy products that include both TSP and a deglosser. This step is very important, because if you don't do a good job painting, the paint will never adhere to the panel surface.
Step 2: Fill in the Cracks and Apply the Primer
Fill in all the bumps and nicks and other irregularities in the paneling with a putty knife and spackle.
Sand the paneling with 120-grit sandpaper to roughen the surface so it will accept more paint. Really apply a lot of pressure. Use a tack cloth to wipe off the dust from the sanding.
Apply an oil-based bonding primer to the paneling with an old brush or roller -- something you're willing to throw away, because the primer is quite difficult and messy to clean off. If your paneling is extra dark, use two coats of bonding primer. I recommend light-gray primer because just about any color can go on
Step 3: Apply the Paint
For a "California" style look, use a soft-vanilla latex over the primer, applying it with a roller.
To add a striping effect on top, mix the some more of the same latex paint with glaze. The more saturated you want your color to be, the more paint you mix in. Load your brush with the paint/glaze mix and drag it in one direction to leave striations. You can also use texture paint on the paneling.
Step 4: Get Amazing Results
The panel painting process is rigorous and time-consuming, but the results are amazing. Just consider this example of a family room before (Image 1) and after (Image2) its paneling makeover.