First you need to develop a story and characters. You should probably start with short fiction and make a short film (as your first masterpiece).

This software is really helpful at writing and formatting scripts, as well as keeping track of your chars, sets, and scenes. I use ver. 6 and I heard ver. 7 has problems.

Now you need to know how to create animations in real-time using Machinima.

You'll also want to improve your communication skills as a director, because storyboarding and blocking shots is going to save your butt.

Great - you've got a film together! Now you have to edit it.

Add in any credits, special effects, or other visual elements to enhance your story.

Unless you've licensed the game engine you're using, you might want to have this legal advice handy.

Some drawing/art techniques which will help you with storyboards and character sketches.

A little inspiration and reassurance never hurt anyone.

A more traditional approach to understanding the process.

This is the book on how NOT to do it.... just kidding. In case you're interested in comparing Machinma real-time animation with traditional animation techniques.