Step One: Buy a black light. Or, if you're cheap as well as lazy, just buy some good quality black light bulbs (they have come a long way since my college days - now they actually work!). We got 3 of these ones and stuck them in one of those spider lamp things that points in a bunch of directions so we could adjust their glow.
Step Two: Black out all the windows of the room you want to party in. I used giant black contractor bags for this purpose. It worked beautifully.
Step Three: Tide! Did you know that plain old Tide (yes, the laundry detergent) glows under black light? I watered some down just a bit and put it in a water bottle with a sports top. Then I used it to splash hearts on a big curtain. Go for the Jackson Pollock effect - this is not for detailed drawings.
Step Four: Tonic Water! Okay, probably everyone knows that tonic water glows under black lights. But it's still cool! Here's a basic recipe for glowing lemonade:
Lemonade concentrate: 1 part lemon juice, 1 part sugar, 2 parts hot water (mix until sugar dissolves)
Mix 1 part concentrate with about 8 parts tonic water in a clear glass.
You could also just buy lemonade concentrate, but I didn't feel like going back out, so I used what I had on hand.
Step Five: Make the kids do the rest of the work! Just shine the black lights at your craft drawers and have them pick out everything that glows. Ditto for the Tupperware cupboard, the toy box, the recycle bin, etc. Then let them make random glowing decorations from what they found. Then give them a bowl of Tide and a paint brush and let them paint on the walls. It's just Tide, it will wash off! (Note: This is apparently not true for ceilings. Oops.)
Step Six: Switch your camera to manual mode so that you can actually take pictures. Hmm... This should probably have been Step One. Oh well, I got two sorta-almost-not-totally blurry shots...