I saw this moon sand recently at Lakeshore (which is, by the way, a really cool store) and felt tempted by buy some... but then I thought maybe I'd quick check on the ol' internet if there was a homemade recipe out there and by gum there was:
1 c. cornstarch
1/2 c. water
2 c. sand
food coloring or packet of koolaid mix
Mix together the cornstarch and water and the coloring. Add the sand and spend some time kneading it all together with your hands. I added two packets of koolaid mix to make it a nice neon red, but you could use whatever you have on hand or no coloring at all. Also, you might want to add a smidge more water... just feel it out.
When you're done, you should have this wonderful mold-able sand that operates kind of like playdough. It's very fun.