If you have a large closet space that isn't already packed full of your children's old toys, outgrown clothing and other belongings, sacrificing it to make way for a craft space allows you to have a bonus area without building an addition onto your home. Your closet may already have at least a minimum built-in storage system, such as shelving or a rod for hanging items. Keep some or all of these fixtures intact for a craft space, since a big part of crafting is having a place to store the ever-growing stash of supplies for projects.
While the closet may have existing accordion or sliding doors, these tend to make your closet craft room space feel cramped or even claustrophobic. Replace the doors with a rod mounted outside the closet, fitted with curtains in colors you find cheery or inspiring, while still suiting the room's overall decor. Curtains make the craft space feel more open, less confined and less closet-like, and as an added bonus, you won't be waging battle with doors that take up valuable space within your work area.
Pegboard, the standard material in many garage workshops, provides storage space for small items such as scissors, unopened packages of beads or tiny items, and spools of wire. Paint the pegboard a color you find inspiring, such as purple or apple green, or the same color as the surrounding area if you prefer a more subdued look. Strips of wood 1-inch thick hold the pegboard far enough away from the wall, so you can add or move around the pegboard hooks around as desired. The actual placement of your pegboard may vary depending on other add-ons for your craft space, but behind your desk or work space is an ideal place to keep supplies within arm's reach.
If dealing with a somewhat small closet -- one too small to be considered a walk-in -- maximizing the space you have is important. A small desk repurposed from another room provides some work space, or you may want to custom-build a work space that includes loads of shelves, a long work surface and room to sit at a chair without bumping your legs. Modular closet storage or shelving systems from a home improvement store can help you build that ideal work surface against the back wall of the closet. If the closet is large enough to walk around in, you can use a large desk or work table, or build one from an old door atop two short filing cabinets. A bright task light on a flexible arm allows you to see what you're working on in full detail.
If the closet space still has rods for hanging clothes, use those rods to hang devices such as a hanging shoe-bin system. Instead of shoes, use the space for craft supplies in shoebox-sized storage tubs. Use high shelving to stash items you don't need frequently, such as boxes of manuals for craft tools or magazines for collage clippings. Stackable storage bins provide speedy access to layers of supplies, especially if the bins are clear or labeled. Hang neatly folded scrap fabric from clothes hangers on the closet rods in a sewing-themed space for immediate accessibility.