Prepare your workspace: you'll need a clean, sharp knife, a cutting board, and paper towels. It's a good idea to place your paper towels directly on your dehydrating rack prior to collecting the pepper seeds.
Wash and dry the pepper you'll be using as your seed source.
Carefully slice off one side of the pepper, taking care not to unnecessarily disturb the area directly underneath the central stem. I typically cut off each side of the pepper one at a time to minimize disturbing the seeds.
Once the central stem has been removed from the pepper, use your thumb to gently brush the pepper seeds onto a paper towel.
Carefully spread the pepper seeds into a single layer on the paper towel. Inspect the seeds as you go and remove any that appear to be damaged or unhealthy.
Place your seeds in a warm, dry location. If possible, I recommend using a food dehydrator to dry your pepper seeds. If using a dehydrator, I recommend processing for 12-24h at about 115*F. Processing times may vary.
Once your seeds have been thoroughly dehydrated, carefully transfer to a paper seed envelope or small, airtight container for storage.
Date and label your seeds and store in a dark, dry place until ready to use.