This article is from the Bicycles FAQ, by Mike Iglesias with numerous contributions by others.
From: Bob Fishell <email@example.com>
Shimano's instructions for adjusting SIS drivetrains varies from series
to series. The following method, however, works for each of mine (600EX,
105, and Deore'). [Ed note: Works on Exage road and mtb also.]
Your chain and cogs must be in good shape, and the cable must be free
of kinks, slips, and binds. The outer cable should have a liner.
clean and lubricate all points where the cable contacts anything.
1) Shift the chain onto the largest chainwheel and the smallest cog,
e.g., 52 and 13.
2) WITHOUT TURNING THE CRANKS, move the shift lever back until it
clicks, and LET GO. This is the trick to adjusting SIS.
3) Turn the crank. If the chain does not move crisply onto the next
inside cog, shift it back where you started, turn the SIS barrel
adjuster (on the back of the rear derailleur) one-half turn CCW,
and go back to step 2. Repeat for each pair of cogs in turn
until you can downshift through the entire range of the large
chainwheel gears without the chain hesitating. If you have just
installed or reinstalled a shift cable, you may need to do this
4) Move the chain to the small chainring (middle on a triple) and the
5) turn the cranks and upshift. If the chain does not move crisply
from the first to the second cog, turn the SIS barrel adjuster
one-quarter turn CW.
If the drivetrain cannot be tuned to noiseless and trouble-free
SIS operation by this method, you may have worn cogs, worn chain,
or a worn, damaged, or obstructed shift cable. Replace as needed
and repeat the adjustment.