Examples

 Shrink a datafile to 64 Mb:

DBCC SHRINKFILE (MyDataFile01, 64);

Shrink a Log file to 8 GiB (8192 MiB):

USE MyDatabase;
GO
DBCC SHRINKFILE(MyDatabase_Log, 8192)
BACKUP LOG MyDatabase WITH TRUNCATE_ONLY
DBCC SHRINKFILE(MyDatabase_Log, 8192)

Afterwords, perform a full backup of the database.
To make the file as small as possible you can specify 1 for 1 Mb, or just leave out the target_size completely, be aware that doing this will slow down the system a little as the system will just have to grow the log file again as soon as another transaction is started.

In SQL Server 2008 the procedure is slightly different, the database must first be set to Simple recovery mode, then shrink the file, then restore FULL recovery mode:

ALTER DATABASE MyDatabase SET RECOVERY SIMPLE
go
DBCC SHRINKFILE(MyDatabase_log)
go
EXEC sp_helpdb MyDatabase
go
ALTER DATABASE MyDatabase SET RECOVERY FULL
go

“Men shrink less from offending one who inspires love than one who inspires fear” ~ Niccolo Machiavelli