In the past, webmasters pretty much had one solution for getting rid of spammy links pointing at their site. Contact the owner of the website, ask that the link or links be taken down and pray they were nice about it (or responded at all). That process remains the first and best course of action but Google has finally provided site owners with a tool as back if their outreach efforts fail.
The Disavow Tool was released offering website owners a way to disassociate themselves with links1 that they otherwise would have to live with. It is a way for lawyers to tell Google that links they were unable to get taken down should not be counted in the factors that go into ranking their site in search. Here is a how-to on using the Disavow Tool
It should be noted that Google never meant for this to be a tool to make your life easier. Rather, it is designed to be a final solution after all other avenues for removing links have been exhausted. Before lawyers go submitting a document to Google telling them to ignore X, Y, and Z links, they will have to do some work first.
Finding Bad Links: If you already know which domains are potentially harming your site, feel free to move on. In order to do any outreach or submit a file to Google, lawyers need to know which links may be doing damage. There are dozens of tools out there for analyzing links. We are partial to Ahrefs and we recently submitted a guest post outlining how to find suspect links on your website2.
Outreach: Once you have your list of spammy domains, you will need to contact the owners of those sites. Craft an email explaining who you are, why you are contacting the offending site, and ask nicely for them to remove the link. Use a whois lookup3 to find administrative contact information for a domain. There is no rule on how many times you should email an administrative contact for a domain but we do it about 3-4 times before moving on. Make sure you save all of these emails for later if you plan on doing a reconsideration request. Google wants to see that you made a concerted effort to fix the issue yourself before coming to them.
Assuming you had no luck in getting third party sites to remove links or that there are still some left that you were unable to get removed, you can now begin the official process of having them disavowed.
Using the disavow tool is a two-step process:
1. You will have to download your links using either a third-party tool or Google Webmaster tools. You can download most of your links from Webmaster Tools and save them to a .CSV file. Go through your links and manually look at the ones you think are harming your site.
2. From this file, you will then create a text file containing all of the domains/pages that you want to disavow. You will insert one URL per line. If you want to disavow all links from a specific domain you only need to include the root domain (www.example.com) and not all individual pages. Instead of doing all of this manually, there is a really great tool from Marty Rodgers4 that generates a disavow file for you.
Once you are finished, you will upload your file using the disavow tool.
Remember that Google does not like when people use the tool frivolously. It is not designed as a reset button or a quick fix. In fact, it can take months before you see any effect on your site from using the tool. Matt Cutts, head of Google Web Spam talks about this in the video below.