This article is from the Model Rockets FAQ, by Wolfram von Kiparski with numerous contributions by others.
From Wolfram v. Kiparski:
> What do most of you feel is the best way to fold 0.5 and 0.25 mil
> mylar 'chutes? I am primarily interested in strategies for low
> opening shock for Egglofters.
On a flat surface dusted liberally with talcum powder, lay out your
> parachute flat. Dust it with talcum powder. Fold it in half to make
> a semicircle. Make sure the shroud lines are lined up on top of each
> other. Dust with talcum powder again. Remember, before you fold,
> dust with powder. Now take one "corner" of the semicircle, and fold
> the chute halfway. You're not folding it in half again! If one
> "corner" is at 0 degrees, and the other is at 180 degrees, bring one
> corner over to 90 degrees - halfway. Now carefully flip the whole
> chute over, and fold the other "corner" over like you did on the
> other side. Examine it until you notice that you have folded the
> chute into an "S" shape. See? Repeat this process again and again
> until you can't stand it any longer. Remember to dust with powder
> before folding. When you are finished folding, the whole chute
> should be folded in zig-zag pleats. The object of doing this is so
> that no folds are trapped inside of another fold. To finish up, fold
> the chute lengthwise two or three times, and wrap the shroud lines
> carefully around the bundle. Parachutes folded this way open very
> quickly when released. Try it at home a few times to get the hang of
> it. Practice.
This technique was taught to me by Chuck Weiss. I later read an
> article in an old "Model Rocketeer" written by Chris Tavares that
> described the same technique.